Govt projections for 2012 based on optimistic scenario, says Varga

The government's macroeconomic projections for 2012 are based on an optimistic script, thus it will have to prepare calculations in the autumn that allow it to react quickly if the situation changes, Prime Minister's Office chief state secretary Mihály Varga told a meeting of economists on Thursday.

The government projects GDP growth of 1.5% in the 2012 budget draft, Varga said at the 49th conference of the Hungarian Economists Society, confirming earlier announcements. It targets a 2.5% of GDP general government deficit and expects a current account surplus of 3.7% of GDP. It puts average annual inflation over 4%.

Hungary cannot achieve sustainable economy growth without reducing its vulnerability, which is why one of the government's most important goals continues to be a reduction of state debt, Varga said.

In Hungary's current situation, liquidity must be ensured, structural reforms must continue and social acceptance of government measures must be achieved, he said. Without these latter conditions, economic policy measures cannot be successful, he added.

About half of the tasks outlined in the Széll Kálmán Plan, a restructuring program announced in March, have been completed, Varga said. The pace of reform is favorable in the areas of education and drug subsidies, and changes have begun in the pension system and the system of local government, but there has been little progress in the renewal of public transportation, he added.