Hungary announces $157 million scheme to reduce heating costs before election
The government of Hungary will partially reimburse households for higher heating costs in January, due to an increase in demand during 'freezing' temperatures. This cost is 50 billion forints (157.14 millions dollars), and adds to the large-scale expenditures ahead of an election scheduled for April.
According to the most recent polls, Prime Minister Viktor Orban has been in power since 2010. His right-wing Fidesz is trailing the centre-right opposition?challenger Tisza.
Eurobarometer's December survey showed that the cost of living was the top domestic concern, despite the fact that inflation had fallen from its highs of over 25% in early 2023 to the central bank tolerance band of 2%-4% by the end 2025.
Energy Minister Csaba Latos said at a press conference on Thursday that "we wish to help all Hungarian households who receive energy via some sort of pipeline".
Hungary imports most of its energy from Russia and has continued to rely on Russian energy throughout the Ukraine war, leading several European Union and NATO allies to criticize Hungary.
Orban's chief staffer, Gergely Gulyas, said that the government would give a discount of 30% to consumers. The measure will be funded in part by government funds, and in part through a tax levied on energy providers.
According to estimates by the European Commission, this measure involves tweaks?to a scheme of energy price subsidy. This system is estimated to cost 1% of economic output by?2024 and 0.5 % of output in 2018. The EU recommended that Hungary 'wind down' the scheme.
Capital Economics analysts believe that Orban's spending moves, which contributed to Fitch Ratings lowering its outlook for Hungary's debt last year to negative, reflect the growing pressure on public finances before the election.
Capital Economics analyst Nicholas Farr stated that "our forecast of the government's deficit increasing to 5,5% of GDP in this year may prove to be overly optimistic."
(source: Reuters)