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EU approves convergence plan, reactions

The European Commission (EC) endorsed Hungary's plans to tame its ballooning budget deficit even as it warned of “substantial” risks that the necessary spending cuts won't be carried out. “We welcome the fact that some concrete measures and steps have already been adopted, but substantial risks and challenges remain,” EU Monetary Affairs Commissioner Joaquin Almunia said in a statement yesterday in Strasbourg, France. Main opposition Fidesz said reacted that the EC's approval on the convergence plan was merely an acknowledgement of a national plan and did not carry a positive message for the economic plans the government was undertaking. “The EC has acknowledged that Hungary will be the last to join the eurozone,” deputy chairwoman of Fidesz Ildikó Gáll Pelcz said. The EC approved the program without debate, EU Tax Commissioner László Kovács (chairman of Socialist Party MSzP) told Hungarian public radio. Recommendations to the program stressed that implementation must be in full focus and that the planned spending cuts would have to show up in the 2007 budget. He added that Hungary offered to prepare a report on the progress of the program every six months. “Hungary has received a green light from Brussels” was how Economy Minister János Kóka interpreted the approval at a debate organized by his liberal junior coalition SZDSZ party. Opposition Christian Democrat KDNP said it was good that the EC has approved the plan, which they however regard as a kind of "confession," with consequences to come in the form of more austerity measures after the October 1 local elections. The smaller conservative opposition party MDF chairwoman Ibolya Dávid said the approval came as a relief, but MDF hoped PM Ferenc Gyurcsány, whose inactive government was part of the reason why a public finance deficit of over 10% has been accumulated, would not use the EC's decision to protect his own power. (Bloomberg, Magyar Hírlap)