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Loss-making state-owned companies must be on sustainable path before consolidation

Loss-making state-owned companies, such as the Budapest public transportation company BKV and railway company MÁV, have to be put on a sustainable path before their debts can be consolidated, Finance Minister Péter Oszkó said at a financial summit organized by the Hungarian Business Leaders Forum.

Former minister without portfolio in charge of the Chancellery's István Stumpf said debts of state-owned companies posed a threat to the budget.

The budget will have a combined HUF 1,000 billion less to work with in 2009 and 2010 because of the economic downturn, Oszkó said. The 3.8%-of-GDP deficit target for 2010 is well established, he added, citing a positive assessment of the 2010 budget by the IMF and the EU.

Former finance minister Lajos Bokros also noted that the 2010 budget had been reviewed by the IMF, the EU and the Fiscal Council, an independent body recently established to review budget bills.

Prime Minister Gordon Bajnai said in a message from Washington that a stable forint, falling interest rates and a budget that had been approved by Parliament were the signs of the current economic situation.

Bills approved by Parliament that narrow Hungary's tax wedge will do much to improve the country's employment situation, Oszkó said. From 2011, the approved changes will make labor costs in Hungary competitive with those in Slovakia, the Czech Republic and Poland.

Hungary's tax centralization rate is set to fall to 39.4% of GDP in 2010 from 40.1% in 2008, he said. (MTI – Econews)