February 11, 2019 / 3:02 PM / 12 days ago

Hungary's birth rate plan expected to cost up to $531 million next year

Hungarian Prime Minister Viktor Orban leaves the stage after delivering his annual state of the nation speech in Budapest, Hungary, February 10, 2019. REUTERS/Bernadett Szabo

BUDAPEST (Reuters) - A new package of tax and benefit measures intended to raise Hungary’s sagging birth rate will kick into effect in the second half of this year and could cost up to 150 billion forints ($531 million) in 2020, state news agency MTI reported on Monday.

Prime Minister Viktor Orban announced the package of measures in his annual state of the nation address as part of his right-wing government’s efforts to increase the birth rate while holding a hard line against immigration.

The measures include offering a loan worth 10 million forints ($35,400) to any woman below the age of 40 who plans to have children. They will only have to repay two thirds of the loan if they have a second child and the debt will be written off completely if they have three or more children.

Such loans will carry no interest and can be used for any purpose, MITI quoted State Secretary Katalin Novak as saying on Monday. The loan will be offered for a three-year period beginning in July, MTI reported.

The package, which also includes mortgage subsidies, could cost up to 75 billion forints, or 0.17 percent of gross domestic product this year, depending on the number of participants, MTI also cited Novak as saying.

Hungary, like many other European countries, especially in the formerly communist east, is struggling with a sharply declining birth rate but is reluctant to take in more immigrants, fearing they will dilute its distinctive culture and undermine social cohesion.

Orban has refused to take in some of the mostly Muslim migrants who have fled to Europe since 2015 under the European Commission’s quota scheme. He also built a border fence to deter migrants seeking to reach western Europe via the Balkans.

($1 = 282.5 forints)

Reporting by Gergely Szakacs; Editing by Gareth Jones

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