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PM, socialists agree on 2010 budget basics

Hungary’s governing socialist party’s (MSzP) leadership and Prime Minister Gordon Bajnai agreed on the basics of the 2010 budget with cuts to local government and transport spending, people close to the party told MTI on condition of anonymity.

Bajnai sought to persuade key figures in the socialist party to accept cuts to local council spending of HUF 120 billion.

The HUF 120 billion forint spending cut is “in the bag” though the fine details of the cuts have yet to be thrashed out, a source told MTI.

The cuts include a HUF 50 billion reduction in spending for developments, excluding ones that are receiving EU co-financing; a HUF 35 billion cut in the funding for operating schools and social institutions, though the amount will be offset by ministry funding as part of a scheme to reduce the tasks of local councils. A HUF 40 billion cut in transportation funding was also agreed. The cut in transportation funding will in reality be bigger as the government will not finance the losses of state-owned railway company MÁV, which are in the tens of billions of forints. Healthcare financing will be frozen in real terms, which translates as a few billion more in expenditures.

The prime minister said after the talks that he was satisfied with the outcome.

MSzP parliamentary group leader Attila Mesterházy said he thought a solution had been reached on questions that were still a matter of debate. The government's proposed 2010 budget will be prudent and disciplined, he said, adding that it would not be geared toward gaining popularity before national elections in the spring.

Mesterházy reaffirmed the budget would be based on a 3.8%-of-GDP deficit target.

Further talks between Bajnai and the socialists will take place on Monday.

The government expects to approve the budget bill on September 9 and it will be presented to parliament on September 11. (MTI – Econews)