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Hungarian corporate leaders back deficit plan to aid euro goal

Hungarian corporate leaders, including companies that poured in more than $65 billion of investment in the country in the past two decades, backed a government plan to cut the budget deficit.

Prime Minister Ferenc Gyurcsány has raised taxes and cut subsidies to slash the European Union's budget deficit. His Convergence Program, endorsed by the EU last month, calls for slashing the shortfall to a third by 2009. Hungary's economic growth has been driven by foreign direct investment since the end of communism. The country's largest corporations, such as General Electric Co. and Deutsche Telekom AG are backing his program for the fastest possible adoption of the euro. “We consider it very important to adopt the euro as soon as possible and that is why we think it's important to execute the Convergence Program,'' said András Sugár, head of the Investors' Council, at a press conference in Budapest. “Let's work together so the Hungarian economy can function better and fulfill the criteria for euro adoption.”

Hungary's government, struggling to control the European Union's widest budget deficit, plans to introduce a new rule that would ensure a surplus for the primary balance from 2008, Prime Minister Ferenc Gyurcsány said today. Lawmakers in the `”next few days” will receive a proposed amendment of budget regulations requiring the government to plan the primary balance without a deficit, Gyurcsány told a gathering of foreign investors. The primary balance doesn't include items such as social security funds. Gyurcsány has raised taxes and cut subsidies to slash the shortfall and set the country back on track toward euro adoption. Hungary's government has missed its deficit targets every year since 2001, partly because of overspending. “There's a strong and unshakeable commitment in the Hungarian government and in government parties to draft a budget producing equilibrium and a positive primary balance by rearranging its own fiscal processes,” Gyurcsány said.
(Bloomberg)