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Hungary plans further public sector cutbacks in 2012 - newspaper

Initiatives

Hungary’s government aims to keep to its 2012 budget deficit target of 2.5% of GDP announced in the Széll Kálmán plan, and expects ministries to further cut staff and material spending next year, business daily Napi Gazdaság said on Wednesday.

The government expects gross wages to increase 4.4% and an inflation rate of 3.5% next year, according to a freshly released budget working document. It foresees a 3.1% growth in 2012.

The document says that in the coming weeks the ministries will have to rethink their tasks and adjust them to budget resources. Ministers will no longer be allowed to transfer funds within their own budget from 2012. The ministries' own revenues will be curbed.

The merging and elimination of organizations overseen by ministries will continue, or at least the Ministry of National Economy will encourage the ministries to take such measures. Even if institutions are not closed down, it will be compulsory for the ministries to cut staff numbers and material spending, and wages will not be raised in the public sector. Employers' payroll taxes will remain as specified by the current regulations.

According to the document, the budget will include expenditure items targeted for the redemption of state guarantees or consolidation in the case of companies including the Malév group, the MÁV group, the Hungarian Electricity Works (MVM), Nitrokémia Zrt and BMSK, the company operating state-owned sports stadiums between 2012-2015.

The extent and the schedule of such consolidations must be planned by the development ministry in the coming period, the paper said.

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