The European Commission on Tuesday called Hungary’s fiscal adjustment strategy “back-loaded” and said the 3% of GDP deficit threshold could be breached in 2012 unless further measures are taken.
The Commission said Hungary would bring its general government deficit under the 3% of GDP threshold by the 2011 deadline in its excessive deficit procedure only because of one-off revenue from the transfer of assets from private pension funds.
“Structural improvement will not begin until 2012 and, taking into account the implementation risks, it cannot be excluded that the threshold may be breached again in that year unless further measures are taken,” it added.
The Commission recommended further measures to increase labor market participation and modernize employment services, thus increasing job opportunities. It also said further reductions in administrative burdens would help improve the business environment and help SMEs grow.
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