The European Commission on Wednesday said Hungary had taken effective action to correct its budget deficit, but added the country need to take additional measures to bring the gap below 3% of GDP by the 2011 deadline.
“The Commission has concluded that the authorities have acted in compliance with the most recent recommendations issued by the Council in July 2009. In particular, Hungary has respected the 2009 deficit target of 3.9% of GDP by adopting fiscal consolidation measures amounting to 1.5% of GDP in 2009. It has also adopted a central government 2010 budget in line with the deficit target of 3.8% of GDP,” the Commission said. “However, there are considerable risks attached to the 2010 deficit target, both on the revenue and the expenditure side,” the Commission added.
“In view of already agreed non-compensated tax cuts in 2011, the required cumulative 0.5% of GDP effort necessary to bring the deficit below 3% in 2011 will have to be ensured through additional measures,” the Commission said.
The Commission assessed the measures Hungary had taken along with those taken by Malta, Lithuania and Latvia to rein in their deficits.
“Hungary and Latvia, which are benefiting from conditional balance-of-payments support, seem on track to bring their deficits to below 3% by the agreed deadlines but they need to pursue their efforts to ensure this really happens,” said economic and monetary affairs commissioner Joaquin Almunia.
The Commission made recommendations to Hungary to correct its budget deficit in July 2009. The Commission started an excessive deficit procedure (EDF) against Hungary in 2004.
The Commission said it would continue to closely monitor budgetary developments in Hungary. (MTI-ECONEWS)