Hungary met 2011 central govt balance target, Matolcsy tells Rehn

Analysis

Hungary met its cash flow-based central government balance target in 2011, according to preliminary data and excluding extraordinary and one-off items, which could help the country to achieve its deficit targets in 2012 and 2013, National Economy Minister Gyorgy Matolcsy said in a letter sent to European Commission vice-president Olli Rehn.

The economy minister briefed Mr Rehn on recent budgetary and legislative developments that could have a bearing on the ongoing excessive deficit procedure (EDP) in a letter dated January 5 and sent by the National Economy Ministry to MTI.

Mr Matolcsy said he was confident that the recent agreement with the Hungarian Banking Association would have a positive impact on growth as the reductions from the bank levy available to banks under the agreement depends on their increased financing for SMEs.

The economy minister noted that the Commission services seemed to incorporate the tax income shortfall while omitting the indirect macroeconomic and budgetary effect the agreement into their forecast.

Mr Matolcsy also said that Parliament adopted all necessary pieces of legislation to base the expenditure reduction measures in 2013 under Hungary’s structural reform programme, the Szell Kalman plan, as scheduled.

The envisaged savings are expected to be realised as planned under the first assessment, Mr Matolcsy said, noting that, because of the amendments made to the initial legislative proposals, they were now quantifying the budgetary impact in detail.

Also, in line with the latest EDP implementation report, a full review of tasks and institutions in the public administration is underway and is scheduled to be completed by early April 2012, the minister said.

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