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PM sees country meeting euro criteria quickly, if balance guarded

After Hungary guards its balance, it can quickly meet the other criteria for adopting the euro, Prime Minister Gordon Bajnai said at a meeting of the national association of managers.

Hungary's general government deficit, in terms of GDP, will narrow to 3.9% in 2009, well under the 6% average for EU member states, Bajnai said. While the EU average will grow in 2010, Hungary's deficit will fall further to 3.8%, he added.

The government's steps will have an effect for 4-6 years, but they will also show positive effects in the short term, such as the strengthening of the forint and an improvement in Hungary's risk assessment, Bajnai said.

Bajnai called the country's tax system the biggest obstacle to growth. This is why the government has taken steps to reduce the tax burden for businesses by HUF 400 billion in 2010, he said.

In the mid-term, a reduction in payroll taxes will improve competitiveness and attract new jobs, he said. Hungary's tax wedge, at 54%, the second-highest in the EU after Belgium, will be reduced to 45.7% as a result of the cut, nearly reaching the 43% rate in the Czech Republic.

Strengthening competitiveness will also be the task of the next government, Bajnai said. (MTI – Econews)