Orban offers financial incentives to boost Hungary's birth rate

BUDAPEST (Reuters) - Hungarian Prime Minister Viktor Orban announced new tax and loan benefits for families on Sunday as part of his government’s efforts to increase the birth rate while holding a hard line against immigration.

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Orban, one of the most outspoken critics of mass immigration to Europe from the Middle East and Asia, added that he aimed to keep economic growth 2 percentage points over the European Union average in the next years despite an expected global slowdown.

There was no immediate government estimate for the cost of the new measures. Orban’s chief of staff, Gergely Gulyas, said on Friday that new spending would be financed from general reserves or surplus revenues in the 2019 budget.

Orban’s ruling Fidesz party faces European Parliament and local government elections this year after a string of protests in recent months against the 55-year-old premier’s rule, although the party still leads in opinion polls.

The rallies were sparked by the passage of laws in December allowing employers to ask for up to 400 hours of overtime per year, and the creation of new administrative courts that will answer to the government and oversee sensitive issues.

As Orban gave his annual state of the nation speech on Sunday, several hundred protesters gathered outside the Presidential Palace in Buda Castle, while about a hundred demonstrators blocked a nearby bridge over the Danube river.

“There are fewer and fewer children born in Europe. For the West, the answer (to that challenge) is immigration. For every missing child there should be one coming in and then the numbers will be fine,” Orban said.

“But we do not need numbers. We need Hungarian children,” he said, announcing the incentives program.

The new measures include the expansion of a loan program for families with at least two children to help them buy homes, subsidies for car purchases and waiving personal income tax for women raising at least four children.

Women below 40 who marry for the first time will be eligible for a 10 million forint ($36,000) subsidized loan, Orban said. A third of the debt will be forgiven when a second child is born and the entire loan waived after the third child.

The 2019 budget targets a deficit worth 1.8 percent of economic output. In January, it posted a 244.5 billion forint surplus, the highest in two decades, data showed.

Zoltan Torok, an analyst at the Hungarian unit of Raiffeisen Bank, said that on first glance the measures could cost several tens of billions of forints, but they were unlikely to produce any drastic increase in the budget deficit.

Despite the street protests, Orban’s Fidesz party remains well ahead of its opposition rivals, according to the latest opinion polls.

The think tank Nezopont put support for Fidesz at 39 percent of all voters in January, largely in line with a 38-percent reading by the pollster Median.

While Nezopont said the fallout of Orban’s December reforms had no impact on support for Fidesz, the Median survey said Fidesz had lost over half a million supporters since October.

Reporting by Gergely Szakacs; Editing by Jason Neely, Gareth Jones and Frances Kerry