BUDAPEST, Jan 29 (Reuters) – The Hungarian government will partially compensate for increased home heating bills in January due to increased demand during a severe cold spell, at a cost of 50 billion forints ($157.14 million), adding to massive spending ahead of April elections.
Prime Minister Viktor Orban, in power since 2010, is seeking to revive the economy ahead of an April 12 vote, with his right-wing Fidesz party trailing center-right opposition challenger Tisza, according to the latest surveys.
A Eurobarometer survey released in December showed that although inflation has fallen from a high of more than 25% in early 2023 to the central bank’s tolerance range of 2% to 4% by the end of 2025, the rising cost of living remains the top domestic concern.
“With this decision, we want to help all Hungarian households who receive energy through some kind of pipeline,” Energy Minister Csaba Lantos said at a press conference on Thursday.
Hungary imports most of its energy needs from Russia and has relied on Russian energy during the war in Ukraine, prompting criticism from some EU and NATO allies.
Orban’s chief of staff Gergeli Gulyas said the government would offer a 30% discount to household consumers, adding that the measure would be partly funded by government funds and taxes on energy suppliers.
The measure involves adjustments to the energy price subsidy system, which the European Commission estimates will cost the equivalent of 1% of economic output in 2024 and 0.5% of economic output last year. The EU recommended that Hungary terminate the program.
Orban’s spending initiatives, which led Fitch Ratings to downgrade Hungary’s debt outlook to negative last year, reflected growing pressure on public finances ahead of the vote, analysts at Capital Economics said.
“Our forecast for the government budget deficit to widen to 5.5% of GDP this year may be too optimistic,” Capital Economics analyst Nicholas Farr said.
(1 USD = 318.18 HUF)
(Reporting by Gergely Szakacs‌ and Anita Komuves; Editing by Philippa Fletcher)
