The government announced measures to ease Covid-19 pressures

HUNGARY - In Brief 19 Mar 2020 by Istvan Racz

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Following the MNB's call for a debt moratorium and for cheap unsecured loans, the government quickly joined in, by announcing new measures to ease the pressures of Covid-19 on the economy. The measures, announced by PM Orbán personally yesterday, were the following:1. A moratorium for the payment of debt redemption and interest owed by enterprises and households to banks under loan contracts signed, and for the loan amounts disbursed, by March 18 2020. The moratorium will end at the end of this year.2. The maturity of short-term bank loans to enterprises will be extended through June 30, 2020.3. The total cost (interest + fees) of consumer loans raised from March 19 will be maximised at the MNB base rate + 5%-points.4. Employers in tourism, catering, entertainment, sports, cultural services and passenger transport will be relieved from social security taxes until June 30, 2020. The social security charges payable by employees in the same sectors will be reduced substantially for the same period. In these sector, rental contracts for commercial properties cannot be terminated and rents cannot be raised until June 30. The tourism development tax, a sectoral charge, will not be collected for the period between now and June 30.5. Employment rules will be made "more flexible", mainly by increasing the flexibility of employers to change the working hours of their employees.The first part of the list essentially means that the government accepted the MNB's proposals and has given those a legal form (by government decrees). The payment moratorium will not change banks' profits for this year significantly, as redemptions and interest will continue to accrue despite not being pa...