Hungary fiscal sustainability risk minimal if consolidation fully implemented, EC says
Hungary faces little or no risk to fiscal sustainability, if the country fully carries through with a planned budget consolidation, according to a fresh report by the European Commission.
"Overall, Hungary appears not to face a risk of fiscal stress in the short term," the Commission said in its Fiscal Sustainability Report 2012. "Risks to fiscal sustainability are low also in the medium- and long-term perspective, conditional upon the full implementation of the planned ambitious fiscal consolidation and on maintaining the primary balance well beyond 2014 at the level expected to be reached in that year," it added.
The Commission said the scale of sustainability enhancing policies Hungary needs to implement is equivalent to 0.5 percentage point of GDP in the structural primary balance, well under the 2.7 percentage point requirement for the European Union as a whole. Hungary's better position mainly reflects lower costs related to ageing and, to a smaller extent, the country's initial budgetary position, it added.
The Commission's 2012 Ageing Report projects an increase in total age-related public expenditures by 1.6 percentage points of GDP over the years 2010-60, well below the 2.9 percentage point rise for the EU as a whole.
Assuming no changes to present policies, the report puts Hungary's state debt at 76.8% of GDP in 2014, before rising to 77.9% in 2018, then falling to 53.1% in 2030.
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