(Bloomberg) — Hungarian Prime Minister Viktor Orban, who seized additional power this week with a state of emergency, said that large companies ranging from energy to airlines will have to turn over their “extra profit” to shore up the nation’s ailing budget.
Banking, insurance, energy, large retail, telecom and airline industries — sectors dominated by multinational firms — will be ordered to turn over the “bulk of their extra profit” to two funds this year and next to finance utility-price subsidies and the cost of modernizing the armed forces, Orban said in a video message on Wednesday.
The fresh financing will help consolidate the Hungarian budget as the European Union imposes an effective funding freeze against Orban’s government, which it accuses of flaunting European norms. The Hungarian forint extended losses against the euro after the announcement, closing in on a record low.
“We ask and we expect that those who made extra profit in this time of war to help the people and contribute to the national defense budget,” Orban said.
The funding move was Orban’s first decision under a wartime state of emergency, which took effect Wednesday, two days after the premier was sworn in to a fifth term in office, allowing his government to rule by decree. Details of the move and its cost will be announced at a government briefing on Thursday, Orban said.
Hungary’s budget has been pushed to the brink by record pre-election spending earlier this year, ahead of the April 3 election win that gave Orban two-thirds control of the Hungarian parliament.
Days after Orban’s landslide victory, the European Commission triggered a freshly introduced mechanism that allows it to ultimately cut funding to members where graft and rule-of-law concerns are prevalent. While some had believed that the tool, which was first used against Hungary, may provide leverage against Orban after more than a decade of power consolidation, there’s been no sign of a change of direction in Budapest.
The Hungarian leader is currently blocking an EU attempt to impose an oil embargo against Russia over its invasion of Ukraine. Last week, he shared a 12-point blueprint with U.S. Republicans on how to consolidate control, including by building a media empire and new institutions. His ultimate message to them: “Play by your own rules.”
The forint dropped 3.1%, the most in more than two months, to near a record low, trading at 394.83 to the euro as of 7:06 p.m. in Budapest. Stocks plunged earlier as OTP Bank Nyrt., Hungary’s largest lender, dived 4.7% while energy company Mol Nyrt. fell 4%.
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