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During times of war, the defence budget has to be increased, the head of the Prime Minister’s Office told a press briefing. Gergely Gulyás said the 2024 defence budget would be “significantly more generous” in terms of operations and development than this year’s. Also, a wage increase in line with inflation is necessary, said, adding that the government continued to urge an immediate ceasefire and peace talks.
Meanwhile, Gulyás said the government is renewing frozen interest rates for retail borrowers and small and medium-sized businesses, and will keep the policy in place until the base rate drops to below 10%. He noted that the interest rate freeze on retail loans was introduced in January 2022 and expanded to SMEs in November. The rate of inflation and, consequently, the base rate make it impossible to scrap the measure, he said. As soon as the central bank base rate drops to below 10%, the government will phase out the freeze on interest on loans. The government expects inflation to fall into single digits by the end of the year, he noted. Phasing out the rate freeze now would place too great a burden on many families and SMEs, Gulyás said. The extension of the rate freeze directly helps more than 300,000 families with over 1,360 billion forints (EUR 3.7bn) in credit, he said. The freeze saved them 80 billion forints in 2022 and 60 billion in the first half of 2023, he added.
The measure also affects more than 28,000 SMEs, with close to 1,000 billion forints in loans, and has saved them 80-85 billion forints since its introduction in November 2022, he added.
As regards the war in Ukraine, Gulyás said Pope Francis’s apostolic visit to Hungary late last month reaffirmed the government’s position that urges an immediate ceasefire and peace as “the only morally right one”. With the pope being pro-peace, “we can say that Hungary’s stance received the strongest possible moral support,” he said. If the Vatican is preparing a peace plan, as the pope indicated, Hungary will support that peace mission, Gulyás said. The extent of the destruction, he said, was “already unfathomable”. “Hundreds of thousands have died, and only a ceasefire can save lives,” he added. Meanwhile, Gulyás said the amendment of the law on the judiciary ensured that Hungary would comply with all requirements for the disbursement of European Union cohesion funds “within weeks”. He insisted that although the “demands were baseless”, Hungary had complied and often exceeded EU demands. “In about a month’s time, we hope to be able to send invoices to Brussels and get payments in return,” he added. The funding would flow from sections of the EU’s budget for the 2021-2027 financial cycle that do not fall under the rule-of-law conditionality procedure but from its Resilience and Recovery Facility set up against the economic fallout of the coronavirus pandemic, Gulyás said. The government aims to ensure access to all resources, he added. “There is serious opposition to that in Brussels and among Hungary’s leftist opposition, but we ask them to stand on the side of Hungarian teachers, health care and the economy,” he said.
Responding to a question on the tax on companies making excessive profits, Gulyás said it was likely that the tax would be maintained at a reduced rate next year. Details will be announced when the final draft of the budget is discussed, he said. Noting the legal obligation to provide a larger pension hike with inflation higher than planned, he said it was “too soon” to say whether such a measure would be taken. Regarding this year’s deficit target, he said it was usual that spending in the first half of the year was frontloaded and the deficit eased in the second half. This is the case this year, too, though the data so far have been “somewhat worse than expected”, he added.
Regarding the situation of teachers in Hungary, Gulyás noted the government held negotiations with unions more than ten times, and they arrived at a consensus on some issues. Most of the problems were wage-related, he said. As long as teachers’ wages are low, “they are easily riled up against the government,” he said. The unions bear responsibility for supporting “political forces working against teachers’ wage hikes,” he said. “The Hungarian left are the main obstacle in the way of raising teachers’ wages,” he said. He attributed the lack of wage hikes to the “extremely harmful” activity of the opposition, adding that left-wing lawmakers were calling for teachers to earn 800,000 forints before tax, yet Hungary was not receiving its share of EU funding “because we are not in favour”. Gulyás added that whereas “accusations of corruption are being voiced in Brussels”, Hungary had implemented “all requested amendments in this area”, while no such objections had arisen in connection with education.
Gulyás said student protests could end if everyone respected legal regulations. He attributed “political motives” to the organisation of protests, adding that for such political forces “nothing is less important than the issue of Hungarian teachers”. “Once they realise that their methods are undermining their political goals, they will stop the protests,” he added. Gulyás said he thought that the area in front of the prime minister’s office should remain closed to the public after the construction project there is completed, adding that such offices where “anybody can touch the wall” were few and far between in the world. “If somebody tried this at the White House, they would be shot immediately, not just teargassed,” he said. The fence at the prime minister’s office was requested by the main constructor around 18 months ago because it is a security zone, and a professional decision was made to erect it, without political considerations, he added.
Asked how he saw the chances of constructing a southern railway line circling Budapest after a court annulled the environmental permit of the project for a second time, Gulyás slammed the Budapest municipality, which “calls itself green even as it stands on the side of those wanting to stymie the development of public transport in the city, rather than on the side of its citizens.” The southern railway line used to enjoy full political consensus with the previous and current leadership of the city, and incumbent mayor Gergely Karácsony has even signed an agreement supporting the project, Gulyás said. “That’s why it is incomprehensible and unacceptable that it later intervened … through the courts,” he said. The 400 billion forint (EUR 1.1bn) investment is key to developing the city’s railway system and suburban traffic, he said. The government will look into the possibility of obtaining a permit within the deadline for the EU funding on the project, he said. If that proves impossible, they will move on to another project beyond the city limits, he said. Gulyás said the Budapest city council was the richest council in the country and one could expect it to maintain responsible financial operations while running the city’s public transport system. It is the city council’s number-one task laid down in law, he added. In response to a question concerning the possible outcome of a Budapest survey refusing to allow private cars to cross Chain Bridge after its revamp, he said that if as many people participated in the survey as those who participated in the government’s National Consultation surveys, then the results would be worth considering. In line with an agreement between the government and the council, the government would contribute financially to the revamp of Chain Bridge only if traffic was properly restored, he added.
In response to a question, he said ruling Fidesz would name its candidate for Budapest mayor once the party board came to a decision. Commenting on the recent appointment of Gábor Böröndi as chief of staff, he said the government had long been seeking a soldier who wanted to “shake up the army”. With the war on Hungary’s doorstep, he added, a new approach was needed. In response to a question about a recent visit by a European Parliamentary delegation to assess the utilisation of EU funds, he said: “It is a unique situation when a thief is given the task of making financial controls”. Hungary cannot expect fair treatment from the EP, he added.
Asked about the EU’s sanctions policy, Gulyás said the government disagreed with the policy in general, but Hungary had been granted exemptions in the most important cases. When it comes to new sanctions proposals, he said, the government’s consideration was always whether the measure in question would hurt Hungarian interests, he said.
On the topic of migration, he said Hungary registered a daily average of 343 illegal entry attempts by May 9, a drop of one-third compared with last year. While the entire western political elite was complaining of growing migration pressure, illegal entry attempts were lower in Hungary thanks to the country’s border protection efforts, he said. The interior ministry can guarantee that human smugglers who are released on condition that they leave the country leave within 72 hours, Gulyás said. The decision not to put Hungarian taxpayers on the hook to keep several hundred human smugglers in prison had been the right one, he added.
Asked about Ukraine’s potential accession to the European Union and NATO, Gulyás said the approval of new members was based on unanimous decision of existing member states. Until there was a ceasefire and peace talks, he said, it would be difficult to discuss these matters, “so peace in Ukraine is a shared interest,” he said. Hungary has always supported the EU’s enlargement in the east, “but the bloc has not even admitted countries that are in a significantly better situation than Ukraine and have fulfilled significantly more of the accession criteria,” he said. “We would welcome a peaceful and prosperous Ukraine joining the EU one day, but it’s important that enlargement be based on objective criteria,” Gulyás said.
Regarding media tenders announced by the US embassy, the minister said he had watched “with interest whenever unofficial relations are made official”. He insisted that hitherto the US Democratic Party had funded Hungary’s opposition, “so it’s slightly better that they’re now funding its media,” he said, adding that it was preferable, however, for the media “to be free of foreign subsidies” since receiving this kind of money entailed media outlets abandoning their independence.
Gulyás said it was impossible to give a definitive answer as regards ratification of Sweden’s NATO accession and whether the vote would be held before the end of the current parliamentary cycle. “We’ll see, we’re not there yet,” he said in reply to a question about whether the Turkish election at the weekend would have a bearing on the matter.
Asked about the release from prison of György Budaházy, a radical activist convicted on terrorist charges, Gulyás said he respected the decision of the president of the republic to pardon him, adding that procedures of the Hungarian justice system at the time had been “shameful”. Gulyás said that had it appeared that public safety would be compromised by his release, the minister of justice would not have countersigned the application for a pardon. He added that the only argument against pardoning Budaházy was that he had committed an act against the state.
Commenting on the government’s plans for the market in construction materials, he said the aim of the government’s pre-emption right was to ensure the free flow of supplies during the period of crisis and shortages, though the government had not availed itself of that right so far. He said it was necessary to increase the share of construction materials in the domestic market. Hungary, he added, does not have a cement industry. “We’d like this to change.”