The government counts on economic conditions potentially remaining bad in 2021

HUNGARY - In Brief 21 Sep 2020 by Istvan Racz

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The are two new pieces of evidence for this. One is the weekend decision to extend the existing mandatory moratorium on the service of bank debt generated before March 2020. As PM Orbán announced on Saturday, the moratorium, which affects 1.6 million individuals and 60k enterprises in the context of HUF 2000bn debt vis-a-vis banks, will be extended by six months, instead of its originally intended expiration at end-2020, for families raising children, pensioners, unemployed persons and participants of social employment programs. Enterprises can ask for an extension of the moratorium for their bank debts for six months if their sales revenues have fallen by at least 25% since the outbreak of Covid-19. In addition, creditor banks will not be allowed to terminate any credit or loan they have extended for another six months after end-2020.The other one is an interview given by finance minister Varga over the weekend, in which he said that the Ministry, which is currently working on the revision of the government's macroeconomic plan until end-2022, is dealing with three scenarios regarding economic growth for 2021. The most optimistic one assumes that a generally applicable Covid-19 vaccine will be available by Q2, in which case GDP could grow by 4-5% next year. The most pessimistic one, however, assumes no vaccination before the middle of 2021, in which case 2021 could bring about "hardly any positive growth". For 2020, the Ministry expects -5-6% growth, a fiscal deficit of 7-9% of GDP, and the gross debt ratio of the government rising to 76-78% of GDP by year end.Part of the domestic press, apparently referring analyst views, has claimed that the forint has weakened toda...