The Hungarian government submitted the draft budget to parliament this week which includes a 670 billion Forint (€1.7 billion) fund to help protect people from gas and electricity price hikes.

This was announced by Péter Benő Banai, state secretary from the finance ministry during an interview with Hír TV.

In addition, defence spending will be increased to 2% of GDP next year, in response to the Russian invasion of Ukraine, in compliance with Hungary’s NATO commitments, the state secretary affirmed.

Furthermore, the draft budget states family allowances will reach 3,225 billion Forints in 2023, an increase of 450 billion this year, he added.

Local governments in Hungary will face utility price hikes as the price caps will be scrapped for businesses and municipalities in the 2023 budget, Banai stated. However, they will see higher revenues amounting to 100 billion Forints as business tax reductions for SMEs will also be lifted, he continued.

In terms of the banking sector, hundreds of billions in unplanned profits were realised due to additional funding accrued during the pandemic that remained in the financial system. Inflation and the base rate also rose, reports Hungary Today.

The state secretary also said that oil and gas extraction is underway in Hungary, with substantial increases in its profitability, some of which is being used as utility subsidies.

The draft budget was drawn up taking into account the impact of the war in Ukraine, Banai said. The government forecasts growth around 4%, whilst elevated energy prices and interest rates continue to weigh heavy on the country’s economy. He went on to say that the budget is creating a 170 billion Forint (€0.43 billion) reserve to “cushion against unforeseen developments.”