Gov’t approves updated convergence program with unchanged deficit targets

The updated program projects Hungary's general government deficit will reach 10.1% in 2006, 6.8% in 2007, 4.3% in 2008, 3.2% in 2009 and 2.7% in 2010, the same as in the program submitted in September. Gross state debt in terms of GDP is projected to reach 70.1% next year, 71.3% in 2008 and 69.3% in 2009, compared to 71.3%, 72.3% and 70.4%, respectively, in the earlier program.
The updated program also calculates a better primary balance, targeting equilibrium in 2008, rather than a 0.2% primary deficit contained in the earlier program. The updated program targets a 0.8% primary surplus in 2009, and surpluses over 1% of GDP in the following years.
The updated convergence program targets 2.2% GDP growth in 2007 and 2.6% in 2008. It projects domestic utilization will increase 0.3% in 2007, compared to a 0.2% decrease in the earlier program, and rise 0.7% in 2008, compared to a 0.5% rise projected in the earlier program. Exports are expected to grow 10.6% in 2007, compared to 12% in the earlier program, and rise 9.7% in 2008. Real wages per capita will drop 1.3% in 2007, compared to 1.7% in the earlier program, and increase 0.4% in 2008, compared to the earlier projected rise of 0.1%. Hungary's external-financing requirement will reach 3.6% of GDP in 2007 and 1.7% of GDP in 2008. The earlier program had put the external-financing requirement at 4.2% in 2007 and 2.2% in 2008.