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Ecofin recommends Hungary rein in gov’t expenditures

European Union finance and economy ministers have recommended Hungary take steps to keep government expenditures in check in order to meet its medium-term budgetary objective, state news wire MTI reported. Hungary continues to dispute the recommendations.

File photo of Ecofin meeting by Alexandros Michailidis/Shutterstock.com

In its recommendations for Hungary, the Economic and Financial Affairs Council (Ecofin) urged action to correct the significant deviation from the adjustment path towards the medium-term budgetary objective by ensuring compliance with an earlier Ecofin recommendation.

The council also recommended steps to ensure the nominal growth rate of net primary government expenditures does not exceed 4.7% in 2020, corresponding to an annual structural adjustment of 0.75% of GDP.

Ecofin recommended action to continue the labor market integration of Hungary’s most vulnerable groups, improve education outcomes, and increase the participation of disadvantaged groups, in particular Roma, in mainstream education.

Ecofin said a focus should be placed on investment-related economic policy, on research and innovation, low-carbon energy, transport infrastructure, and waste management and energy and resource efficiency, taking into account regional disparities. Competition in public procurement should also be improved, it added.

The council urged steps to reinforce the anti-corruption framework, including by improving prosecutorial efforts and access to public information, and to strengthen judicial independence.

Ecofin added that Hungary should continue simplifying the tax system, while strengthening it against the risk of aggressive tax planning. 

Varga decries ‘double standards’

Hungarian Minister of Finance Mihály Varga said the country-specific recommendations for Hungary were "based not on actual facts, but on double standards," in a statement issued by his ministry. He added that Hungary had not supported the adoption of the recommendations and had protested the procedure in a separate declaration.

"The Hungarian government expects the results of the European Parliament elections in May to have a positive impact on the operation of the EUʼs system of institutions soon, and after that current policy will not creep into professional matters," Varga said.

"Hungary finds it concerning that the European Commission failed to take into consideration Hungaryʼs stand on disputed parts [of the recommendations]. It is unfortunate that the proposals by the Finnish presidency to modify the text did not take suitable stock of Hungaryʼs concerns," he added.

Varga said the merit of Hungaryʼs economic performance is "indisputable," noting that the countryʼs GDP growth in the first quarter was close to three times the EU average, the unemployment rate is among the lowest in Europe, and wage growth has been continuous.