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Gov’t approves updated convergence program with unchanged deficit targets

The government on Friday approved Hungary's updated convergence program, which contains the same general government deficit targets as the program submitted to Brussels in September, online economic news portal reported.

The updated program projects Hungary's general government deficit will reach 10.1% in 2006, 6.8% in 2007, 4.3% in 2008, 3.2% in 2009 and 2.7% in 2010, the same as in the program submitted in September. Gross state debt in terms of GDP is projected to reach 70.1% next year, 71.3% in 2008 and 69.3% in 2009, compared to 71.3%, 72.3% and 70.4%, respectively, in the earlier program.
The updated program also calculates a better primary balance, targeting equilibrium in 2008, rather than a 0.2% primary deficit contained in the earlier program. The updated program targets a 0.8% primary surplus in 2009, and surpluses over 1% of GDP in the following years.
The updated convergence program targets 2.2% GDP growth in 2007 and 2.6% in 2008. It projects domestic utilization will increase 0.3% in 2007, compared to a 0.2% decrease in the earlier program, and rise 0.7% in 2008, compared to a 0.5% rise projected in the earlier program. Exports are expected to grow 10.6% in 2007, compared to 12% in the earlier program, and rise 9.7% in 2008. Real wages per capita will drop 1.3% in 2007, compared to 1.7% in the earlier program, and increase 0.4% in 2008, compared to the earlier projected rise of 0.1%. Hungary's external-financing requirement will reach 3.6% of GDP in 2007 and 1.7% of GDP in 2008. The earlier program had put the external-financing requirement at 4.2% in 2007 and 2.2% in 2008.