- Orban faces toughest challenge of his 15-year rule
- Economy mired in three-year period of stagnation
- Cost of living, economy, health dominate election concerns
- Veteran leader racing against time to turn economy around before the election in April 2025
Hungary's [prime minister] Viktor Orban may have got a brief poll boost last month from a costly pensions sweetener but he faces a race against time before April's election to turn the stagnating economy around enough to extend a 15-year grip on power.
Orban's reelection bid will be watched far beyond Hungary. A thorn in the side of the European Union, the nationalist leader counts U.S. President Donald Trump as an anti-EU ally and maintains close ties with Russia's Vladimir Putin.
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While the inflation surge has lifted Hungarian food prices close to EU average levels, the annual average full-time salary per employee was third-lowest in the bloc and pension spending is also among the lowest as a share of output.
The pension top-up, aimed at Hungary's 2.4 million retirees who make up over a quarter of the electorate, will cost $454 million next year, with its price tag rising each following year as it is phased in over the next government cycle.
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The pension moves will have a far larger cost in the long run. In August the IMF warned that, without reforms to its pension system, Hungary was set for "explosive growth" in borrowing beyond 2030, with its public debt estimated at a staggering 255% of output by 2054.
Some public comments to Orban's Facebook post announcing the pension top-up were critical of the move, calling instead for hikes to smaller pensions or indexation to wages, while others derided it as a "joke" or "vote buying".
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"The problem is that (sentiment) is still negative and it cannot be changed dramatically in a few months. The time is too short and the amount of money to be distributed is limited," 21 Research Centre Director Daniel Rona said.