Page 35 - bne Magazine Apri20

bne April 2020 Cover story I 35
PUBLIC HEALTH MEASURES
• The government ordered a state of emergency on March 11 first banning all outdoor gatherings of more than 500 and 100 indoor which led to the cancellation of the March 15 national holiday for the first time. Schools and universities were shut down a few days later. Hungary’s borders were completely closed on March 16 and allowed only Hungarian citizens to enter. Pharmacies, drug stores, grocery stores, tobacco stores, and gas stations can remain open. New makeshift hospitals are being constructed across the country. The government acquired millions of masks from China and protective gear and promised to ramp up testing.
• On March 26 Hungarian Prime Minister Viktor Orban took emergency powers that included suspending parliament and the right to rule by decree that has worried observers as these are dictatorial powers.
ECONOMIC MEASURES
• The government announced a relief package to lessen the immediate effects of the coronavirus pandemic on the Hungarian economy.
• On the recommendation of the National Bank (MNB) the cabinet imposed a moratorium on all corporate and loan repayments and fees, including financial leasing contracts until the end of the year.
• The APR for all consumer loans taken out after March 19 will be maximized at 5pp over the base rate of 0.9%. Short-term business loans are prolonged until 30 July.
• Sectors severely hit by the pandemic (tourism, restaurants, entertainment venues, sports, cultural services, transportation) will be exempted from paying social security contributions.
• Businesses and private entrepreneurs were granted exemption from paying the flat HUF50,000 (€143) small business tax (kata) until June 30. All evictions and foreclosures will be suspended until the end of the state
of emergency, just like the enforcement of tax debts. • Rules for home delivery services were eased and
employers are allowed to alter work schedules any time. • Hungarian media providers will get tax reliefs to balance
missing ad revenues.
• Child care allowances and child care benefits expiring
during the state of emergency will be prolonged until
the special legal order terminates.
• The central bank MNB rolled out collateralised lending
facility for banks with no upper cap and implemented measures to boost bank assets eligible as collateral from HUF7tn to HUF9.6tn. Commercial banks were given exemption from reserve requirements and the central bank also changed the terms of swap tenders and reduced administrative burden.
ECONOMIC FORECASTS (where available)
• The central bank cut its 2020 growth forecast to 2-3% from 3.7% and inflation outlook to 2.6-2.8% from 3.5%. Analysts are less upbeat. The median estimate of local analysts for 2020 GDP was 0.5%. Economic researcher GKI projected a 20% plunge in Q2. Foreign economists expect a 3-5% contraction for 2020. The service sector, which accounts for two-thirds of the GDP, took an immediate hit. Tourism alone employs some 400,000 and accounts for 10% of the GDP. The government estimates that unemployment at 3.5% or 160,000 will rise by several hundreds of thousands of people this year. The impact of the loan repayment moratorium on banks’ bottom line could reach HUF50bn (€143mn), which compares with the sector’s HUF700bn profit in 2019.
• Hungarian analysts see the stimulus measures announced by the government account for only 0.5% of the GDP, below that of regional peers. The government will rewrite the 2020 budget. The Finance Ministry estimates that this will entail a HUF3tn fiscal overhaul. The 2020 budget was approved with a 1% deficit target and 1.2% in reserves. Analysts predict the deficit to jump to 3-4%.
Czech Republic VIRUS UPDATE
• Number of cases as of March 25: 1,654
• Number of deaths as of March 25: 6
• Comment: According to official data published by the
Ministry of Health, most of the cases are registered in Prague (308), followed by Central Bohemia (201). The country was the first among European countries to close its borders and limit movement of its citizens. The
first three cases were confirmed in the Czech Republic on March 1. The National Security Council immediately suspended flights to Italy and South Korea and in the past three weeks approved a series of measures that paralysed everyday life of Czech citizens and Czech business.
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