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2011 budget to be sealed today

Hungarian lawmakers will sign off on Thursday on a 2011 budget that will slash the deficit with one-off revenues, leaving markets hoping more reforms due in February will finally put the country on a sustainable fiscal path. One of the big merits of the budget is that it managed to cut the deficit below 3% of GDP, but the way it was done has generated a heated debate.

Another interesting part of the budget draft is that it only counts with HUF 529 billion coming from the re-channelling of pension savings from the second pillar, although the ratio of those returning to the state pension system is most likely to be over 90%, resulting in a HUF 3,000 billion of revenues in the budget, business daily Világgazdaság calculates.

However, the government's strong parliamentary majority makes Thursday's final budget vote all but a formality and the eyes of investors are now trained on what they hope will be a programme of more durable public sector reforms due to be announced at the end of February.

On Wednesday, most of the leading European newspapers have introduced their worries on the new Hungarian media law being anti-democratic. German daily Frankfurter Allgemeine Zeitung said that the controversial law is on the thin line between regulation and censorship while the conservative Die Welt compares the current period to the authoritarian and anti-Semitic ‘30s. Some Italian dailies such as the Corriere della Sera and La Repubblica have also found the new law being against democratic principles while the Polish daily Gazeta Wyborcza has presented its solidarity in Hungarian language and said that Orbán wants to put an end to the free press in Hungary. At the same time, German Chancellor Angela Merkel and Luxembourg Foreign Minister Jean Asselborn have raised their voice against the new law. The European Commission is evaluating if the law is in contradiction to EU guidelines. (BBJ)