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Redrafted budget to put 2009 growth under 2%

The Hungarian government's redrafted 2009 budget will contain a GDP growth projection under 2% Finance Minister János Veres said after the governing socialist party’s (MSzP) extraordinary congress. The new budget bill could be prepared by October 20, Veres said.

The original budget bill, submitted to Parliament at the end of September, was based on 2009 GDP growth of 3%.

Veres said that the government will also prepare an “absolutely pessimistic” scenario, based on GDP growth of less than 1%.

Veres said the budget deficit for this year can be reduced partly from reserves and partly from cutting expenditures planned for the remainder of the year, though he declined to go into details.

The 2008 budget deficit will certainly be under the expected 3.8% of GDP, he said. The original target was 4.0% of GDP.

Reducing the 2009 deficit from the original target will require spending cuts, he said, without saying how big. Nothing is taboo and there will certainly be spending items hit, he added.

Veres also argued for the passing of a bill on public finances which would help to keep budget discipline and ensure the deficit narrows steadily and is at a sustainable low level.

In a 12-point action plan outlined to group leaders of the five parliamentary parties on Friday, Prime Minister Ferenc Gyurcsany called for a reduction of the 2008 general government deficit to 3.4% of GDP, and a reduction of the 2009 deficit target from 3.2% of GDP to 2.9% of GDP.

The action plan, which the government discussed with central bank (MNB) governor András Simor, includes an amendment of the budget bill that contains new macroeconomic conditions, deficit reductions, including spending cuts, the postponement of tax cuts originally planned for 2009 and a law on public finances. (MTI – Econews)