Page 6 - bne IntelliNews monthly magazine November 2024

6 I Companies & Markets bne November 2024
designed to bolster support for the ruling party, which faces a tight election contest with the emergence of the Tisza party, which is polling neck-and-neck with the governing populist Fidesz party.
One of the pillars of the new economic programme would be wage convergence. Marton Nagy in a Friday presentation said the government supported an agreement between employers and unions that would raise the minimum wage to 50% of the average wage by 2027. That would require the minimum wage to rise from HUF266,800/month at present to HUF374,800 by January 1, 2027, and to HUF419,800 a year later, he added. At the same time, the average wage could rise from HUF651,150/ month at present to HUF970,000 by 2028
The wage convergence could be supported by the launch of a credit scheme for young blue-collar workers, doubled family tax preferences and low inflation, Nagy said.
Another element of the programme would be to stimulate the housing market. Whilst the rate of homeownership in Hungary is one of the highest in the EU, with around 90%, there is a housing crisis as prices tripled over the last decade.
The lack of affordable housing, especially in major cities, is also hindering workforce mobility.
So far, the government has proposed allowing tax-free withdraw- als from pension savings for home purchases. According to the draft proposal, this one-time opportunity would be available for one year from January 2025. Government and industry estimates suggest that this could mobilise HUF300bn for home purchases.
With demand for housing loans rising, and a lack of new development, there is a risk that further stimulus on the
Prime Minister Viktor Orban in his regular Friday interview gave a preview of the programme. / bne IntelliNews
demand side will push up home prices further. Real estate broker Duna House estimates that prices could go up by 10-15%.
SME development will also be a key focus, including access to equity financing and preferential credit. Credit penetration of small businesses is well below the EU and regional average at 13-17%. The lack of innovation, high energy usage, and poor energy efficiency are making Hungarian businesses less competitive.
In his Friday interview, Orban stated that the planned steps could boost Hungary's economic growth to 3-6%, up from the current 1-2%, aided by a "policy of economic neutrality", a new buzzword from the prime minister. This concept is based on the assumption that Hungary could lose out if new economic blocs form on the global stage.
Fallen gold output reported at flagship mine Kumtor seized by Kyrgyzstan government
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Kumtor Gold Company has announced fallen gold produc- tion at Kyrgyzstan’s nationalised flagship Kumtor mine – but the authorities have given assurances that the decline is temporary.
Kumtor, located at 13,000 feet (almost 4,000 metres) near the Chinese border in the Tian Shan mountains, is vital to Kyrgyz- stan’s economy. It accounts for around a tenth of Kyrgyz GDP. In 2023, state company Kumtor paid more than $200mn into the country’s budget.
In 2021, Kyrgyzstan’s then new Japarov administration seized
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the mine from Canada’s Centerra Gold. A deal between the Kyrgyz government and Centerra on the transfer of the mine to the Kyrgyz state was eventually struck, but not before, almost exactly three years ago, Centerra raised anxieties that the mine under the new government-appointed management, was falling into operational difficulties. One claim was that glacial water was flowing uncontrolled into a mine pit.
There are also worries that gold that can be extracted by open-pit mining at Kumtor is dwindling and that the miners will have
to step up efforts in far more exacting underground mining to access sufficient amounts of the precious metal.