Hungary launches $157 million scheme to curb heating costs ahead of election
BUDAPEST, Jan 29 (Reuters) – The Hungarian government will partially reimburse 50 billion forints ($157.14 million) in increased heating costs to households in January due to increased demand due to freezing temperatures, contributing to large-scale spending ahead of April elections.
Prime Minister Viktor Orban, in power since 2010, is trying to stimulate the economy ahead of April 12 elections in which right-wing Fidesz trails centre-right opposition rival Tisza, according to most new polls.
A Eurobarometer survey published in December showed that the rising cost of living was outweighing domestic concerns, although inflation fell from highs of more than 25% at the beginning of 2023 to the central bank’s tolerance range of 2% to 4% by the end of 2025.
“With this decision, we want to help all Hungarian families who receive energy through some kind of pipeline,” Energy Minister Csaba Lantos said at a press conference on Thursday. he said.
Hungary meets most of its energy needs through imports from Russia and remains dependent on Russian energy during the war in Ukraine, leading to criticism from many European Union and NATO allies.
Orban’s private secretary, Gergely Gulyas, said the government will give a 30 percent discount to household consumers, adding that the measure will be partially financed from government funds and a tax on energy suppliers.
The measure includes tweaks to the system of energy price subsidies, which cost 1% of economic output in 2024 and 0.5% of last year’s output, according to European Commission estimates. The EU recommended that Hungary abandon the plan.
Capital Economics analysts say Orban’s spending moves, which contributed to Fitch Ratings downgrading its outlook on Hungary’s debt to negative last year, reflect increasing pressure on public finances ahead of the vote.
“Our forecast that the government’s budget deficit will widen to 5.5% of GDP this year may be overly optimistic,” Capital Economics analyst Nicholas Farr said.
($1 = 318.18 forints)
(Reporting by Gergely Szakacs and Anita Komuves, Editing by Philippa Fletcher)
