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Gov’t decides to have deficit of less than 3% in 2011

Hungary will target a general government deficit below 3% of the GDP next year under a decision taken by the government, National Economy Minister György Matolcsy said.

The first condition to a deficit of less than 3% of the GDP next year is the fulfillment of this year's 3.8% deficit target and the second is to extend the extraordinary banking tax to 2011, the minister said.

A third condition is a GDP growth between 2.5%-3% next year, which would generate additional revenues of HUF 150-200 billion, a fourth condition is to create a cheaper state and public administration, while the fifth condition is to consolidate the finances of the state-owned companies.

Matolcsy said that if the Hungarian central budget is able to collect the HUF 200 billion targeted from the bank tax and block HUF 120 billion worth of expenditures, this year's 3.8% deficit target will be met.

A 2011 deficit goal below 3% of GDP is in line with the respective 2.8% target set Hungary's euro convergence program updated by the previous government in January this year. To keep the deficit below 3% was reportedly one point of friction at the talks that ended uncompleted between the Hungarian government and the delegations of the International Monetary Fund (IMF) and the European Union under a regular review of Hungary's 2008 autumn standby agreement in July. (MTI – Econews)