The money tap remains far from being fully open

HUNGARY - In Brief 23 Mar 2020 by Istvan Racz

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Today, PM Orbán announced new measures to protect the economy against Covid-19 effects, in addition to the ones made public a few days ago (on March 18). However, the new package appears to be even slimmer than last week's, and in fact it is nothing else than a few additions and refinements added to the previous list. Most importantly, about 81 thousand small entrepreneurs (including hairdressers, electricians, plumbers, gym trainers, health care service providers, etc.) will be relieved from their tax liabilities until June 30. In addition, media service providers will also get some tax relief, similar to tourism and catering, in view of the drying up of revenue from commercials. In this latter case, the specifics of the measure are still missing. Finally, the small entrepreneurs mentioned above will get a moratorium on their tax payments until the end of the existing emergency situation, and in the same way, evictions and sequestrations in view of tax and other financial liabilities will be suspended for the duration of the running emergency period (which is legal category).In sum, it seems to us that the government is just not in the mood to throw out lots of public money yet, despite the obvious danger of a major setback to the economy. Our first very rough estimate is that the total impact of all the crisis relief measures announced by the government so far must be well below 0.5% of annual GDP.Similarly, the MNB has not carried out any steps to achieve an immediate loosening of monetary conditions since its initial announcements made early last week. Over the past seven days, it added in only HUF 54bn of liquidity through its extraordinary 1-week FX swap instrume...