Review of the Convergence program draft

Daily Napi Gazdaság got hold of a draft version of the convergence program which, besides listing the formerly announced austerity measures, de facto gives up the target date of 2010 for Euro adoption. The document forecasts the central budget deficit at 4.3% of the GDP and the gross debt volume is set at 72% for 2008, as against the 3% and 60%, respectively, required for Euro adoption. In 2007 real wages per capita are expected to average 4% below this year’s figure, while household consumption is said to drop 0%-1%. Hospitals’ active bed capacity will definitely decrease, mainly in Budapest and the western and southern regions of the Transdanubia. However, exports are expected to expand and are expected to provide the main boost behind of economic growth. Trade balance may shrink to 2% of the GDP by 2009 from the 5% in 2004. State-owned transportation companies MÁV Zrt and BKV Zrt will be given substantial subsidies, MÁV may have two capital injections, Ft 80 billion each, and BKV Ft 35 billion a year between 2007 and 2009. Property tax, to be introduced in 2008, will serve as safety reserves to keep the deficit targets. According to the draft, pensions will be taxable from 2013. (Napi Gazdaság)