Prime Minister Ferenc Gyurcsány's Socialist Party and the Alliance of Free Democrats today signed a coalition agreement to govern together in the next four years.Gyurcsány, under pressure from the European Union and credit ratings agencies to cut the budget deficit, pledged to balance public finances in “a very short time.” He said the government may alter a five-year tax reduction plan passed last year, worth Ft 1 trillion.
“The government system of taxes and contributions, of public burden, will be overhauled,” Gyurcsány said in Parliament today. “The government of reforms is next.”
Hungary's budget deficit is the EU's largest compared with the size of the economy. Gyurcsány must cut the shortfall in half to qualify for euro adoption and has pledged to meet the criteria by 2008.