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EcoFin on Hungarian economic reforms

Analysis

Yesterday the Council of EU Finance Ministers, the EcoFin, accepted the assessment of the European Commission (EC) on the measures taken by Hungary to meet the objectives of its convergence program, but emphasized the importance of consistency in carrying out the reforms. 

Like the EC, EcoFin also finds next year's deficit target risky, mainly if economic growth slows down or the government fails to curb public expenditure. At the same time, EcoFin would appreciate a lower than targeted deficit of 6.8%. Finance Minister János Veres agreed with the concerns and said he finds it a realistic target to decrease the deficit even further than it was planned, all the more since Hungarian calculations predict a 6.4% deficit for 2007, lower than the previously forecast 6.8%. EcoFin suggested that the public sphere's wage level should be taken care of. In 2007 real wages will drop less than it was targeted in the convergence program and inflation is decreasing faster than it was projected, so public opinion will probably more understanding toward the reform, said Veres. (Napi Gazdaság)

 

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