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Hungary will deliver reform

Hungary's government will demonstrate to skeptical investors that it is serious about fiscal reforms when it unveils the 2007 budget draft in September, Economy Minister János Kóka said in an interview with Reuters on Wednesday. Kóka said that the budget would deliver proof that the government is not just raising the tax burden but cutting spending and subsidies that have bloated the budget deficit to about 10% of gross domestic product (GDP) this year. Kóka declined to say if overall budget spending would fall next year. He said, however, that the market was going to see "significant" reductions in the costly motorway spending plan, subsidies to railways and other loss-making state firms, while social outlays would be capped by firm limits. Kóka acknowledged that investors had the right to be skeptical given the newly re-elected government's track record of missing its budget goals for four years and setting up a fifth miss this year. "The perception of Hungary is worse than reality due to the loss of credibility," he added. "We need to regain it first and foremost." (Mti-Eco)