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Institute sees HUF 900bn fiscal improvement needed in 2012

Hungary will require fiscal adjustments of more than HUF 900bn in 2012 and more than HUF 1,400bn in the following years if it is to meet its deficit target, according to a study by the Fiscal Responsibility Institute Budapest (KFIB) based on the methodology of the Fiscal Council Secretariat, which was disbanded at the end of last year.

Legislation approved and government measures announced up to September 8 will result in a HUF 700bn fiscal improvement in 2012 and HUF 1,200bn-1,400bn annual improvements from 2013, KFIB estimated. The estimate does not calculate with the fiscal effects of a more recently announced early FX repayment scheme or a 18% rise in the minimum wage, and it assumes the elimination of the practice of adding half of social contributions to the personal income tax base, the institute added.

Government measures announced thus far will not allow "crisis taxes" levied on the retail, energy and telecommunications sectors to be lifted before 2015, according to KFIB.