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Speedy agreement with IMF-EU most important OECD recommendation

The most important recommendation by the Organization for Economic Co-operation and Development (OECD) in a fresh survey on Tuesday was one to reach an agreement on financial assistance from the International Monetary Fund and the European Union as soon as possible, National Economy Ministry state secretary Zoltán Cséfalvay said after the Economic Survey of Hungary was published.

In the survey, the OECD said an agreement on the assistance would "help restore confidence and support needed fiscal consolidation", lowering the debt burden in foreign currency by stabilizing the exchange rate.

Cséfalvay said the second most welcome recommendation concerned a restructuring of public transportation and the third was about the strengthening of voluntary pension funds.

The OECD said in the survey that expected savings from restructuring of public transport had not been achieved so far, in spite of cuts in price subsidies; rather, state support had increased. It suggested that further bailouts be linked to tighter fiscal constraint and a rationalization of overall service provision. It added that public ownership in "potentially competitive segments of the network industries" should be phased out.

The OECD said encouraging the development of a voluntary third pension system pillar was one measure that could support stable and affordable financing of the economy while minimizing financial risks. It noted that the average annual real net yield of 1.65% achieved by mandatory Hungarian pension funds in 1998-2010 was "very low by international comparison".

Almost all members of Hungarian private pension funds – which were mandatory for years – returned to the state pension pillar when offered the option last year.