In addition to protecting jobs, the government continues to prioritize creating new jobs, as well as encouraging investment and supporting families. Therefore, the budget focuses on relaunching the economy, which is in a difficult state due to the coronavirus pandemic. This is a prerequisite for economic growth of 5.5 percent this year.
Although the budget deficit is not as low due to the virus situation, it is not as tragically high as it was at the same period last year, Gabor Rigos, chief economist at the End of the Century Institute, said on his M1 This Morning show. He added: The value-added tax revenues are developing well in the first six months, and the value-added tax has also developed well, with an increase of about 13.3 percent.
At the end of last year, the state spent as they put a stop until they were ready to go into deficit. In addition to ongoing spending, such as paying pensions and paying wages, there are additional expenses for road renovations, virus-related health expenses, or even ban subsidies.
The economist also pointed out that the state also spends a lot on supporting families, and supportive investment has come to the fore. In such a situation, state revenue will fall, but it does not matter how the government will react to it.
Gabor Rigos said that during the previous crisis, around 2008, we could see that the previous government cut expenditures in order to reduce the general government deficit, but this also led to lower demand in the economy, so it does not help to recover from the crisis. There is no panic mood as it was in 2008, in 2009, the current government is not seeking a loan from the IMF.
He added that over time, we need to return to a deficit of less than 3 percent, and even a surplus can be targeted.