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PM says gov't measures serve to enhance Hungary's economic autonomy and stability

Prime minister Viktor Orban said on Tuesday that the measures his government has taken since coming to office early last summer have served to enhance Hungary's economic stability and autonomy.

Speaking during an appraisal of his administration's first 100 days on office, Orban said that the government had introduced a HUF 2m-per-month salary cap for public-sector employees and imposed an extraordinary 98pc tax on their severance pay while reducing state administrative and personnel expenses by HUF 120bn, in order to improve Hungary's financial stability. The prime minister noted that the wage cap will apply to all public-sector employees, including the leadership of the National Bank of Hungary, even if it draws criticism from abroad.

EU sources confirmed late Tuesday that the European Union Economic and Financial Affairs Directorate General had called upon the government to amend the stipulation of the public-sector salary cap regulating National Bank of Hungary Chairman Andras Simor's salary, giving the government one month to react.

Orban stated that the introduction of an extraordinary banking-sector tax, which is expected to generate revenue of HUF 187bn this year, and the position adopted in talks with the International Monetary Fund (IMF) this summer show that the government is committed to recovering Hungary's financial independence and economic autonomy. In July, negotiations between the government and the IMF and EU, as part of a regular review of Hungary's November 2008 IMF-EU standby loan, ended inconclusively.

The government had to ban the further provision of foreign-currency-denominated mortgages to prevent families from losing their homes. The government and the central bank have little influence on the forint's exchange rate, Orban noted.

The government had to extend the current system of gas and district-heating fee-preferences which the previous government phased out in "a sneaky manner", timed just after the election, the prime minister said. They are aware that the system has to be reviewed, but the phase-out would have caused severe financial difficulties to almost one million families.

The government wants to reach a new, more rational agreement with gas and electricity distributors, easing the burden to consumers, Orban said, noting that the government has introduced regulated retail prices in both areas.

Orban said that the Hungarian Socialist Party government that took office in 2002 had committed a "political crime" by financing social expenditures through foreign loans, thus generating Hungary's massive foreign debt. The prime minister remarked that in 2011 Hungary would repay HUF 2,858bn in debt and in 2013 more than 3,000bn, much more than the government generates in personal income-tax revenue each year.

The prime minister said that Hungarians had broken with the era of utopias and laid the foundations for a new system based on truth during his government's first 100 days in office. (MTI Econews)