Has published fresh details of the Economic Protection Action Plan

Prime Minister Viktor Orbán has announced the second phase of the economic protection action plan, which will reallocate 18-20 percent of Hungarian GDP, including resources of programs by the Hungarian National Bank (MNB). Sources of the action plan: MNB HUF 3,000 billion, as well as the previously announced special taxes to be paid by local governments, multinational and domestic commercial stores and the banking sector.
The budget deficit will be raised from 1 percent to 2.7 percent. As it is well known, the first phase included e.g. the suspension of social security contributions, assistance to KATA taxpayers and the repayment of bank loans.

The detailed regulations of the announced measures are to be published yet .

See you please our earlier news:

•  The first economic measures with respect to the coronavirus situation  (2020.03.18.)
•  The Hungarian Government has adopted new regulations on economic protection (2020.03.23.)

However they can be summarized as follows on the basis of a press conference by ITM Minister László Palkovics and President of the MNB, György Matolcsy.

Employment protection measures

• State aid will be granted in case of reduced working time – for the period of the shutdown - with a cap which means effectively that the Hungarian state will take over 70% of the loss of salaries for 3 months.
• For 3 months the government grants 40% extra salary to those employed in the field of engineering and R&D.
• An enterprise portal was set up to simplify administration and to answer questions.

More financial resources for enterprises

The corporate sector will be supported with credit guarantee and capital programs. For all businesses (from micro-enterprises to large enterprises) preferential loans of up to HUF 2000 billion (approx. € 5.58 billion) and state guarantees in the amount of more than HUF 500 billion (approx. € 1.4 billion) will be made available. A restructuring sub-fund and a transactional sub-fund will be established.

• simple tender constructions are created for technological innovations and innovations in order to protect the “green economy”

• credit guarantee and capital programs will be opened in the amount of HUF 2,000 billion, with a state guarantee of HUF 500 billion (eg Széchenyi loan program, EXIM, MFB, Agrár and Garantiqa programs), and new funds will be launched (eg SME Rescue, Restart Fund, etc.).

• The “NHP Hajrá” will start with 1000 billion new funds and the “NHP Fix” resources will continue, in which 500 billion will be available.

• Change: the term increases to 20 years, the available loan amount is HUF 10 billion, and all loan targets are reopened: development investment, working capital loans (including salary payments), and loan redemption is also possible from the resource.

• Members of the banking system (commercial banks) will receive discount rate 4% from the MNB until 30 June 2021. The loan rate is maximized at 2.5%. The MNB is waiting for starting a competition between commercial banks, so 0% or even negative rate loan would be available on the loan market. The credit application is evaluated in maximum of 2 weeks.

• The terms and conditions of the Growth Bond (Növekedési Kötvény) are available for more companies, and will also change: the term will increase from 10 to 20 years, and the MNB will increase the amount of available funds from HUF 20 billion to HUF 50 billion.

• The government is created a new capital program to protect domestic investors from hostile foreign acquisitions.

• The MNB reduced the reserve base of the bank-system to 0, thus increasing the liquidity of commercial banks and help to open more allocations of funds.

• The key interest rate and the overnight deposit were left unchanged, but in the meantime the central bank raised the interest rate on the one-week loan and the one-week covered asset to 1.85%, bringing the interest rate corridor to 190 basis points.

• As a further measure, e.g. also favourable consumer loans.

Tax and administrative obligation reliefs

• Social contribution tax will be decreased by 2% from 1 July 2020
• The deadline for the filing of annual financial statements and the related tax returns will be postponed until 30 September 2020.
• EKÁER: Exemptions from deposits in the EKAER system (i.e. the system whereby the transportation of goods is subject to electronic surveillance and placement of deposits with the Tax Authority is required in certain cases) and the possibility of automatic repayment will be introduced.
• VAT refunds will be accelerated: for normal taxpayers, it will be 30 days (from 75 days) and for reliable taxpayers, it will be 20 days (from 30 days).
• To facilitate tax payments the possibility of payment deferral and instalment payments will be introduced. The taxpayers’ qualification as ‘trusted’ will not suffer by reason of non-compliance during the state of emergency.
• Employees will remain insured during their unpaid leave. It is unclear, however, whether any social security contribution will be payable during this time and by whom.

Sectoral assistance

The state will provide extra financial resources (600 billion HUF) for certain (still to be identified) priority sectors in the next three years in the form of investment grants, preferential and guaranteed loans. Further measures are promised for the tourism and catering sectors:

• tourism taxes will be suspended until 31 December 2020,
• social contribution tax related to SZÉP cards (a form of fringe benefit) decreases to 4% until 30 June 2020, and the budget allocation for SZÉP cards will be increased. HUF 600 billion (approx. €1.56 billion) will be provided to support the tourism sector.
• Subsidies will be provided to universities and to private research institutes for health research, and a health care industry innovation agency will be established for the coordination of this activity.

Other measures

• About 75000 graduates could receive their diplomas without passed language exam.
• Special student loan for university students of HUF 500 thousand with 0% rate
• The government starts a several online courses (mainly in IT topic). The 95% of the tuition fees are supported by the state, and the students in these courses are entitled for a 0% adult student loan also.

Pension and family protection measures

• the 13-month pension will be gradually reduced between 2021 and 2024 (with a weekly pension)
• familiar benefits will be payed also until the end of the emergency time.

This summary is just a quick report.
More details of the government’s measures are expected. VGD's expert staff is happy to answer for your any questions. Please contact us!

E-mail: vgd.budapest@vgd.hu