Hungary to give subsidised loans to firms, raise budget gap to 2.7%/GDP - PM Orban

Hungary will raise this year's budget deficit to 2.7% of economic output from 1% to help finance an economic stimulus package including massive subsidized loans to Hungarian companies, Prime Minister Viktor Orban said on Monday. Orban said the package, which would amount to 18%-20% of gross domestic product (GDP) including the central bank's programs, would help jump-start the economy, which has taken a major hit from the novel coronavirus pandemic.

Last week parliament, where Orban's ruling Fidesz party has a big majority, granted him the right to rule by decree indefinitely to fight the coronavirus, ignoring calls by opponents and human rights groups to put a timeframe on the extra powers. "The goal is to create as many jobs as are destroyed by the virus," Orban said in a televised speech.

The National Bank of Hungary is expected to announce new measures on Tuesday. The government has already imposed a blanket moratorium on all corporate and household loan repayments until the end of the year. Orban said the government was ready to pay some of the wage costs of companies in case they are forced to cut working hours and would support investments with 450 billion forints ($1.33 billion).

There will be targeted support for segments such as tourism, the food industry, and construction. Subsidized loans to Hungarian firms will total more than 2 trillion forints ($6 billion), while pensioners will get one month's extra pension, disbursed in four tranches, he said.

The government had already announced on Saturday a $2 billion special fund to aid the fight against the coronavirus, which will include contributions from banks and foreign retailers. In the past, Orban's government has used unorthodox measures such as special taxes on banks and other sectors to help fix the budget. ($1 = 335.3300 forints)