The Minister for Economic Development, Márton Nagy, outlined targeted steps to support the corporate sector threatened by the energy crisis and rising prices at AmCham Hungary's Business Forum in the Gundel restaurant in Budapest this Thursday.
The manufacturing sector in Hungary, especially SMEs, are highly exposed to rising energy prices, and the energy intensity could further increase several-fold by 2023, a summary of the minister's speech highlights on the website of the American Chamber of Commerce in Hungary.
Minister Nagy argued there are four potential solutions to contain the skyrocketing prices, i.e. introducing a comprehensive cost-based electricity pricing mechanism, taxing excess profit in the energy sector, strict regulatory framework to prevent excessive speculation and restore market liquidity, and extending the mandate of monetary policy to moderate inflation and stimulate the economy.
EU member states have different approaches to addressing the issue, says Minister Nagy. The German approach is based on the principle of supporting all sectors equally with large funds, albeit at a significant cost. Some countries opt for a "great reset", letting inefficient sectors go and putting domestic industrial policy on a new basis. Hungary has elected to take targeted, efficient measures within the budgetary constraints.
He added that the Hungarian government's response rests on three key pillars. The Energy Cost and Investment Endownment Program for Manufacturing SMEs is aimed to primarily support manufacturers on the bottom of the supply chain with energy costs and energy-efficiency investments in order to alleviate liquidity problems, ensure job security and maintain competitiveness. The Large Enterprises Energy Efficiency Investment Program is developed to support the biggest manufacturers with energy-efficient investments. The third measure, the Job Protection Program, provides tax reliefs and simplified tax conditions with benign requirements.
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