Hungary: Analysts say parliament should adopt 2009 budget

Éva Palócz, CEO of economic research company Kopint Tárki, said it would unfortunate if Parliament did not approve the 2009 budget proposal, adding that in this case foreign investors might be willing to finance the country’s state debt only at a higher price.

László Akar of the economic-research institute GKI agreed that it would not be good for the country if the budget is not adopted. However, Akar noted that this would represent a positive development for Hungary’s deficit, because it would compel the government to use the figures contained in last this year’s budget, which would reduce spending in real terms.

Prime Minister Ferenc Gyurcsány announced earlier that he would resign if the budget is not approved. Hungary could remain without a budget for three or four months if early elections are held. However, if a new prime minister is appointed, a new budget might be approved earlier. The budget could be approved by the end of the year if the parliament is dissolved, though this is unlikely to happen, because the government’s former coalition partner SzDSz has said it is against the idea.

If Parliament does pass the budget, it will not pass tax proposals either and state revenue would not decrease. However, Akar said it would be unfortunate if the proposed budget act was not approved. Pensions would still increase, since this is regulated by a separate act, while wages in the public sector would not increase.

If Parliament does not pass the budget act, it could approve a “temporary act” that regulates state revenue and expenditures until the “real” budget is approved, Akar said. It would be no tragedy for the country to lack an approved budget for one or two months, as a public sector wage rise could always be made retroactively, but a longer term without a budget could cause problems.

If Parliament fails to pass the budget act, it could also fail to reach a consensus on other more important legislation, after which the question must be asked if anybody is really governing, Akar said. (MTI–Econews)