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FM says ministries must make further cuts to planned 2010 budgets

Government ministries must plan to further reduce their 2010 budgets based on the budgetary-expenditure cuts that the government has imposed this year, the Finance Ministry (FM) reported on its website on Tuesday.

Finance Ministry Spokesman Ferenc Pichler earlier informed MTI that the FM and the government would like to accelerate the process of formulating 2010 ministry budgets, which they plan to submit to parliament on September 9. The October 2008 law on efficient government administration stipulates that the government submit proposed 2010 and 2011 budgets whose corrected preliminary sub-systematic total expenditures rise by a maximum of 50% of expected real-term GDP as compared to the real-term sum of the previous year's budget. The law furthermore stipulates that the proposed 2010 and 2011 government budgets ensure that Hungary's Maastricht-defined deficit decrease compared to that of the previous year.

The government currently expects Hungary's 2010 GDP to decline by 0.9% and its budget deficit to be 3.8% of GDP next year.

The finance ministry noted that the January 2010 budget law stipulates that only foreign-currency-denominated expenditures and those based in established contracts or legislation can be uncapped. Furthermore, the entire sum of government and private-public-partnership (PPP) investments must be counted as a budgetary expense during final accounting procedures, while such investments must be repaid in pro-rated installments throughout the remaining validity of the contract. The investments of majority state-owned companies must be settled in the same manner if based on an ownership decision. The previous stipulations apply to contracts signed after January 1, 2010. The January 2010 budget law also stipulates that the profit of state-owned economic companies must be regarded as revenue during the year in which they were generated, while losses must be regarded as expenses.

The finance ministry expects the forint-euro exchange rate to be 280.70 during the period in question from 2010 through 2013. The previous year's budget will provide the basis for the current year's budget. The finance ministry said that 2009 expenditure cuts must therefore be built into 2010 ministry budgets, adding that ministries must not plan to hire new staff next year.

One-off 2009 expenditures must be built into 2010 ministry budgets, while government support cannot be increased in the course of transferring of duties. The finance ministry noted that the regulation system regarding 2010 salaries is not final and will be contingent upon the results of negotiations with unions. (MTI-Econews)