Hungary prepares USD 30 billion coronavirus package to jump-start economy

Hungary is preparing to announce a roughly $30 billion package of measures to help jump-start the economy, a top government official said on Saturday, as the coronavirus outbreak shutters factories and raises the spectre of recession.

Parliament, where the ruling Fidesz party has a strong majority, has granted Prime Minister Viktor Orban the right to rule by decree to fight the coronavirus, ignoring calls by opponents and rights groups to put a timeframe on the extra powers.

Orban, who has been in power for a decade, has flagged the biggest economic package of the country’s history to offset the economic impacts of the pandemic, which has already led to tens of thousands of job losses.

The premier is expected to unveil the measures on Monday, after the government approves them, his chief of staff Gergely Gulyas told a news conference. The National Bank of Hungary will announce steps after its policy-making Monetary Council meets on Tuesday.

Gulyas said the total package would amount to 18-22% of Hungary’s GDP, equivalent to about $30 billion. It was not immediately clear where the cash would be targeted, though some steps have already been taken.

The government has imposed a blanket moratorium on all repayments on corporate and household loans this year, and the central bank has launched a series of steps to provide liquidity for banks.

It has also created a $2 billion special fund to aid the fight against the novel coronavirus, which will include contributions from banks and foreign retailers.

Domestic banks will be expected to pay 55 billion forints ($163 million) into the fund this year, with multinational retailers adding 36 billion forints.

Another $4 billion fund was created to aid economic and employment efforts.

Hungary’s economy grew by 4.9% last year but several analysts now expect a recession this year, as big carmakers have already announced temporary shutdowns lasting for weeks, and sectors including tourism have collapsed.

Gulyas also said the central bank acted in a timely manner on Wednesday to stem what he called “a strong speculative attack” against the forint, which caused the currency to weaken to record low levels of 360-370 against the euro this week.

The central bank offered banks a new one-week deposit facility at a rate of 0.9%, a measure that economic analysts called an implicit rate hike. The move successfully reversed the forint’s rapid weakening and lifted interbank rates.