The reduction of public debt represented one of the most prominent policy objectives of the second Orbán government after it came to power in 2010, constituting a central element in its “freedom-fight” rhetoric emphasizing the administration’s struggle to liberate Hungary from Western financial domination and thereby regain the country’s national sovereignty.

Hungary’s public debt stood at 21.16 trillion forints, or 80.0 percent of GDP, at the end of the first quarter of 2010, the final quarter before the formation of the second Orbán government (see sources for all public debt data at end of article). 

At the end of 2009, Hungary’s public debt amounted to 77.8 percent of GDP, the sixth-highest figure in the European Union behind Greece (126.7 percent), Italy (112.5 percent), Belgium (99.5 percent), France (83.0 percent) and Austria (79.9 percent).  

The Orbán Government’s War on Public Debt

In his annual State of the State Address in February 2011, Prime Minister Orbán said “In 2011 we are declaring war against government debt. . . . We must and will defeat government debt, which is the source of most of our problems and difficulties today. If we do not overcome it, then it will overcome us once and for all” (source in Hungarian from 24:00).

On June 21, 2011, Prime Minister Orbán announced that the Government Debt Management Center had used 1.35 trillion forints in relinquished mandatory private pension funds to pay down Hungary’s public debt, declaring “For us Hungarians this is important also because it has been around 20 years since the last soldier of the occupying Soviet army left Hungary and at that time many of us thought . . . that Hungary had thus regained its freedom and independence.” The Hungarian News Agency’s partially paraphrased report on the prime minister’s announcement continued as follows (source in Hungarian):

He added, however, that over the past 20 years “We had to bitterly experience the validity and truth of the old wisdom” that a nation can be subjugated in two ways—with the sword or with debt. Today in Hungary, seven of every ten forints in tax revenue must be used to pay off the government debt and “this cannot be called freedom even with the greatest amount of goodwill.”

Whether the leaders of the country generated this debt out of stupidity or intentionally is a question in connection to which everybody would like to know the truth, which is why the investigative committees that are attempting to uncover these occurrences are so important.

Viktor Orbán stated that government debt is not an economic problem, but an enemy, which if not defeated, “the enemy will defeat us.” He said that he believes we have won the first important battle in this war, since a turning-point has taken place.

In his 2012 State of the State Address, Prime Minister Orbán declared that had the government not taken action to reduce public debt, Hungary would have “permanently lost its independence” just as Greece and that “instead the people’s will, creditors would be ruling in place of us” (source in Hungarian from 20:40). 

The new constitution called the Fundamental Law that National Assembly representatives from the Fidesz-KDNP governing coalition ratified in April 2011 and which came into effect on January 1, 2012 requires that all government budgets reduce Hungary’s public debt as long as this debt remains higher than 50 percent of GDP.

The Orbán government ended its highly proclaimed “war on debt” in 2013. Prime Minister Orbán did not mention the issue of public debt in his 2014 State of the State Address, nor did he broach this subject during his campaign speeches prior to Hungary’s 2014 National Assembly election (source A and B in Hungarian).

Public Debt during the Second and Third Orbán Governments

Hungary’s gross debt rose in absolute terms in six of the seven years in which the second and third Orbán governments were in power for the entire year (2011 through 2017). However, Hungary’s gross debt as a percentage of GDP decreased in five of these seven years (see table below).

Between the end of 2010 and the end of 2017, Hungary’s gross debt increased by 6.25 trillion forints in absolute terms, though decreased by 6.6 percentage points as a percentage of GDP. Hungary’s decrease in gross debt as a percentage of GDP during this seven-year period was the highest among the eight European Union member states located in East-Central Europe (see table below).

 

Sources for public debt data: Eurostat table “general government gross debt“; and Hungarian Government Debt Management Center table “Az államháztartás (maastrichti) adóssága” (table not available in English).