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UPDATE - Govt to discuss ways to fill HUF 100bn 'hole' on Mon, Tues

The government will discuss the necessary measures to fill a HUF 100 billion "hole" in this year's central budget at cabinet meetings on Monday and Tuesday, National Economy Minister Gyorgy Matolcsy said on Thursday.

Decisions will be taken on measures such as ones that increase the efficiency of tax collection, Mr Matolcsy said.

The government will also make a second reading of the 2012 budget draft at the meetings, he said.

Early estimates put Hungary's GDP growth at 2% or lower this year, which would add HUF 80 billion-100 billion to the general government deficit, state secretary of the Prime Minister's Office Mihaly Varga said at the weekend. To fill this "hole", the government would not take a single big step, but 8-10 smaller measures that would each narrow the fiscal gap by HUF 10 billion-20 billion, he added.

Mr Matolcsy said that Prime Minister Viktor Orban had held talks with 11 leading Hungarian economists, the majority of whom agreed that the government should continue its economic policy aimed at the reduction of state debt and deficit as well as the need of structural transformation of Hungary's economy. 

The national economy minister added that the majority of the economists had cautioned the government against changing the proportional taxation system and raising taxes, notably income taxes. 

The government instituted a flat-rate income tax regime this year.

The economists also agreed that the current global economic and financial crisis represents a significant risk for Hungary, which, although farther from the focal point of the crisis than it was previously, remains economically vulnerable. The economists agreed that the current crisis could last up to 8-10 years. 

Prime Ministerial Spokesman Peter Szijjarto said that Mr Orban had conducted the talks with economists Peter Akos Bod, Laszlo Csaba, former National Bank of Hungary Chairman Zsigmond Jarai, Istvan Hamecz, Gyorgy Barcza, Karoly Szasz, Istvan Torocskei, Gyorgy Szapary, Mihaly Arnold, Lorinc Soos and Henrik Auth.