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Financial stability, reforms ensure 2013 deficit target will be met

Some HUF 300 billion in reserves make achieving the deficit target realistic even if growth is less than expected, Cséfalvay said at the event organised by the Hungarian Economics Association and the Fiscal Council. The government targets GDP growth of 1.6% in 2013.

Cséfalvay said the government's HUF 300 billion workplace protection plan is a demand side incentive and includes a HUF 101 billion reduction of the burden on labour. Hungarian reforms are directed at preventing a deterioration of financial stability and an increase in state debt, he said. Hungary's state debt as a proportion of GDP is set to fall to 78.0% this year and to 76.8% next year, he added. He cited as examples of reforms the Stability Act, the Fiscal Council and supply side labour market policies, including flexible labour regulations.

The revenue side of next year's budget reflects the full adoption of the 16% flat-rate tax, the phasing out of sectoral crisis taxes and the halving of the bank levy, Cséfalvay said. The expenditure side includes HUF 400 billion related to the takeover of local council tasks, HUF 90 billion in general government savings and an increase in home building subsidies to HUF 173 billion from HUF 53 billion this year.