Having blocked the new draft of the seven-year EU budget and the off-budget Economic Recovery Fund, the authorities of Hungary and Poland seem to have prepared in advance for possible consequences. Many European politicians and officials were surprised to accept this position, as they were sure that these countries were losing as much as others.
If we look at the data on GDP growth, budget deficit and public debt for the current year, we can see that Poland and Hungary are in a more stable situation compared to some other EU countries. Hungary also built up a huge foreign exchange reserve and placed 2.5 billion euros in government bonds on the international market a few days before the veto.
Attila Weinhardt, analyst:
I think that given these factors – even in the event of a deep recession and uncertainty related to EU funds, Hungary’s budget is stable. I do not see any problem points with which one can blackmail or break the will of the Hungarian government. In general, I do not see an opportunity to put enough pressure on the Hungarian authorities to make them sign an agreement that they do not want to sign.
The only sign of nervousness in the Hungarian markets was the short-term increased demand for the exchange of local currencies for euros, dollars and gold. But it turned out that this had nothing to do with the veto, but only with a short rise in the forint exchange rate.
David Ablonzi, owner of the exchange office:
Indeed, the forint has strengthened against the euro: you could buy the euro for 355 forints. It is very expensive if we compare it with the indicators of previous years, but for this year the rate is still not bad – so many began to buy foreign currency. This led to a small “explosion”, our supplies were running low. But it only lasted a few days.
Gabor Tanach, Euronews correspondent in Budapest:
Many Western analysts have suggested that Viktor Orban is “bluffing” and that Hungary needs extra-budgetary Economic Recovery Fund funds in the same way as other EU countries. But it looks like the Hungarian government has prepared for the economic fallout from the veto – and Hungarians are not worried yet.
In this regard, the American agency Bloomberg notes that the EU is considering an agreement on an economic recovery plan and budget without the participation of Hungary and Poland. These two Eastern European countries blocked the proposed plan due to a new mechanism for distributing financial assistance, which takes into account the observance of the principles of the rule of law in the country.