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Continued austerity to ensure growth in 2011

The minority Hungarian Socialist Party government will continue with its crisis-management programme until the general elections, and if the next government proceeds along the same lines, Hungary will see economic growth of up to 4% in 2011, Prime Minister Gordon Bajnai told MTI on Sunday.

The government will “continue the implementation of its austerity program until its very last day in office, because the crisis does not consider political cycles or campaigns,” Bajnai said.

Bajnai praised “the sacrifice people had made in 2009 and 2010” and said that it had enabled the government to preserve jobs, welfare services and solidarity.

In 2009, the government proved that putting an end to the “wasteful economy” of public institutions was an efficient policy that must be continued in 2010, Bajnai said. The prime minister added that the full-fledged ramifications of the crisis could only be felt in 2010, which would make it too early to start increasing redistribution.

“It will make it difficult for the current government and will require a lot of discipline from the next one,” Bajnai said.

Unless the next government deviates from the current path of austerity, it could generate a surplus of approximately HUF 2,000 billion (€7.35 billion) during the next four years, Bajnai said, cautioning that this amount should not be utilized to fulfill campaign promises, but “spent wisely” on the country's debt service, improvements in public administration, efforts to cut taxes and control the budget deficit.

Bajnai said that Hungary's key financial-data would be made available to “all democratic parties in the elections, thus ensuring that election programs are founded upon the same knowledge base and that nobody will be able to talk about “skeletons in the closet” later on.

Concerning the right-wing nationalist Jobbik party, the prime minister said that he did not consider it to be a democratic organization and that “it should be quarantined by all democratic forces.”

Outlining the government's plans in its last four months before elections expected in April, Bajnai said changes would include formulating new rules for consumer protection against unfair business conduct on the part of public-utility services, closing the gap between higher education and the labor market, reducing red tape and promoting job preservation, supporting Roma integration and plans for the micro-loan project. Bajnai added that he had no plans to reshuffle the government during his final months in office.

The prime minister said that changes introduced on January 1, 2010, included a decrease in the value-added-tax on district heating from 18% to 5%, an expansion of the range of crimes that are investigated by default, the adoption of a “code of ethics” for banking practices and rules making it easier for a parent to return to work following childcare leave. Offshore companies will pay a 30% tax at the source, while the monthly minimum wage will rise to HUF 73,500 (€272) and pensions will rise faster than inflation, Bajnai added. (MTI-ECONEWS)