In his introduction to the 50-page government report, Gyurcsány said the past six months of “difficult but important” measures were aimed at building a more equitable and competitive Hungary by following a stability-targeting government policy. He said measures in the next few years will be introduced in three stages, first the foundations of balance will be established, then the pillars of reform will be built and finally developments will appear on the top. Hungary’s euro convergence program – submitted to Brussels in September and updated in December – introduced austerity measures and laid down medium-term fiscal policy, the report said.

With tax rises and spending cuts implemented already in 2006, the public finance deficit will be curbed at 10.1% of GDP, as opposed to 11.6% if no measures had been implemented. Taxes payable in 2007 will be worth 38.1% of GDP, but after gradual decline from 2008, the level of taxation may be cut back to 37% of GDP by 2010, the report said. Spending cuts are pledged to be in the focus of bringing government finances to balance, and revenue boosters will only account for 10% of planned measures, according to the report. By 2010, central government spending is planned to be cut from the current 52% of GDP to 45.5%, while revenues including EU funding are expected to rise from 41.9% of GDP to 42.8%. The government targets showing a primary balance in 2008 and a primary surplus in public finances starting in 2009 or 2010, the report says. (Mti-Eco)