Wall Street Journal has reported that Hungary needs to implement further structural measures so its public debt declines in a sustainable way and the country avoids the resumption of the European Union’s strict budget surveillance. As the European Commission announced on Wednesday, the measures and factors outlined by the Hungarian government to bring public debt down by year-end “cannot be a substitute for genuine fiscal consolidation efforts in order to put government debt on a firm downward path.”
The main problem is that Hungary’s public debt has been the highest in central Europe as a percentage of gross domestic product for many years. It totaled 85% of GDP at the end of June, the central bank said Tuesday. It is no surprise, that national economy minister, Mihály Varga announced major financial reforms for the coming years last week. Meanwhile the economic growth has still remained significant. As economic think tank Pénzügykutató says, it will reach 3.1% this year before slowing to 2.3% in 2015. Researchers of the Budapest-based think tank forecast average annual inflation of 0.1% this year and 2.4% next year.
As for the annual budget deficit, economic state secretary András Tállai said yesterday, that Hungary would keep its budget deficit below the 3% of GDP target this year too. Tállai was responding to a report by the European Commission, which suggested that Hungary might again face an excessive deficit procedure if “genuine fiscal consolidation efforts” fail to take place. Tállai said the Commission was drawing its conclusions based on June data.
source: blog.wsj.com and hungarymatters.hu photo: EC buliding (euractiv.com)