Next year, there will be more money for family support, wage increases, healthcare and economic development. Mihály Varga bid farewell to the parliament.
The parliament voted on next year's budget, the proposal was adopted with 125 yes, 56 no and zero abstentions. This was one of the last decisions of the in-laws this year, at the event, Minister Mihály Varga, who will be replaced by György Matolcsy at the head of the Magyar Nemzeti Bank from next March, bid farewell to the parliament, so the current one was the last budget drawn up by the Ministry of Finance under his leadership.
On November 11, Mihály Varga handed over the draft legislation on next year's budget to the parliament. According to its description, the government:
- the level of the budget deficit from 4.5 percent of GDP to 3.7 percent,
- the public debt as a proportion of gross domestic product would be reduced from this year's 73.2 percent to 72.6 percent,
- inflation to 3.2 percent,
- while GDP growth It is planned for 3.4 percent,
and with this the total value of the GDP may increase to HUF 88,000 billion.
In 2025, the total expenditure of the budget is calculated at 42,862.1 billion forints, while on the revenue side it is at 38,739.1 billion forints, so the Ministry of Finance planned next year's budget with a cash flow deficit of 4,122.9 billion forints.
Among the main areas, the government allocates a total of HUF 3,717 billion for health care in 2025, 330 billion more than this year, and a total of HUF 3,876 billion for education expenditures, which is an increase of nearly 500 billion compared to the 2024 allocation. The increase in the chapter's appropriation to this extent is explained by the teacher salary increase, as the salary of teachers will continue to rise on January 1st, by 21.2 percent.
But on top of that, wage increases are expected in the public sector in 2025: the provision will cover the salary increase of those working in the water sector, but the wages of judges, prosecutors, and vocational trainers will also increase according to the government's plans.
As the pension fund continues to swell, next year it will already reach HUF 7,200 billion, which is 655 billion higher than the 2024 appropriation.
In order to preserve the real value of pensions, pensioners will receive an increase equal to 3.2 percent inflation starting January 1st, and the cabinet also guarantees the payment of the 13th monthly pension in February. One change, however, is that the national defense and overhead defense funds, which were set up by the cabinet during the 2022 energy crisis, will be abolished. However, this does not affect either overhead defense or national defense expenditures, the latter of which will reach NATO's goal of 2 percent of GDP next year as well.
Although the Budget Council found risks in its opinion on the budget, such as the low reserve of 100 billion, it nevertheless had no objections. When submitting the bill, Mihály Varga said that the predictions of political analysts and international credit rating agencies confirm the government's expectations.
These feedbacks also show that the 3.4 percent growth trajectory can be considered well-founded, said the head of the ministry.
This year, the government broke a decade-long tradition by submitting next year's budget to the parliament in the autumn session, not in the spring, which was justified by the fact that they had to wait for the results of the US presidential election. Prime Minister Viktor Orbán spoke for the first time in Tusnádfürdő. If Donald Trump is elected, there will be radical changes in the world economy, so the government is preparing a peace budget in preparation for this situation.
After the American presidential election campaign, we are in a calm state, so far the ship has pulled, the wind has been blowing, the campaign itself is a hurricane and it has moved the ship of the peace supporters forward at high speed - Orbán said more than a week later that Donald Trump won the presidential election, the prime minister betrayed it also that when preparing next year's budget, two alternatives were examined: there will be peace or there will be no peace.
Mihály Varga already explained what would have happened if the pro-peace forces had not won. According to the minister, the government should have spent more on defense spending next year, which would have diverted resources from other areas, so it could have spent less on family support or healthcare.
Part of next year's budget is the 21-point economic action plan, which aims to focus on three main areas:
- increasing the purchasing power of incomes, within the framework of which the three-year wage agreement was created, the worker's loan program is launched, and the tax credit for children will increase by 50 percent from July, and by another 50 percent on January 1, 2026.
- improvement of housing conditions (airbnb is becoming stricter, apartment rental fees and contract conditions are being improved, dormitory, rural home renovation and banking programs are also being launched, voluntary pension fund assets can be temporarily used for housing purposes as well)
- and the Sándor Demján program (doubling the size of enterprises: capital financing program, government support for digitalization transition, interest rate reduction for loans, launching an "investment" campaign through Eximbank) would help Hungarian SMEs.
In addition, next year, state interest expenses will be significantly reduced, which will result in a serious expansion of room for maneuver for the cabinet, after 4.8 percent of accrual-based interest expenses calculated as a percentage of GDP this year, they will only amount to 3.8 percent in 2025, i.e. nearly 900 billion more can be spent on investments and economic development, as in 2024.
In addition, several large investments, such as CATL, BYD, and BMW's capacity improvements, are also turning to fruition, which can also have a beneficial effect on state revenues. This is also why Viktor Orbán could say several times in recent months that 2025 will be fantastic.
Cover photo: Mihály Varga
Source: Faebook/Mihály Varga
