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Hungary: FinMin presents 2008 budget draft

Initiatives

The government approved the draft version of the 2008 budget, announced Finance Minister János Veres at the conference after the government session yesterday.

The plan shows a drop in the cash-flow deficit of public finances from Ft 1,529 billion ($8.62 billion) expected in 2007 to Ft 1,240 billion ($7 billion). The deficit is expected to arrive at 4.1% of the GDP as against the 4.4% marked in the convergence program and the 6.4% expected for 2007. The positive deviation from the convergence program is possible through an unexpected decrease in interest expenses. As a significant change, the 2008 budget's primary balance is positive again, as it used to be before 2000. The debt volume will grow only slightly, from the 65.6% of GDP to 66.1 %. There is no need for further austerity measures, said Veres, only to pursue a strict budget management. The government expect a 2.8% economic growth (over the inflation), and hopes to see exports and investments fuelling this growth. Consumption expenses will stop decreasing in 2008 but will grow only by 0%- 0.5%. No considerable layoffs can be expected. By 2009 the government will have fulfilled the conditions for adopting the euro currency, promised Veres. The general reserve will be Ft 56 billion, same as this year, the central balance reserves will total Ft 20 billion, while the Ministries’ planning reserve is set at Ft 89 billion (Napi Gazdaság, Gazdasági Rádió)

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