Hungary reiterated plans today to cut its budget deficit to 6.8% of gross domestic product next year from a targeted 10.1% this year, Finance Minister János Veres said, citing the country's draft budget.
“The government today approved the draft budget for next year, which is line with the main targets and figures set out in the convergence plan,” Veres said at a Budapest briefing after the government debated the first reading of the draft.
Prime Minister Ferenc Gyurcsány is raising taxes, energy and drug prices and cutting government jobs to trim the deficit. Hungary's euro-adoption plan, submitted to the European Commission Sept. 1, forecast its deficit by European Union standards to fall to 3.2% of GDP by 2009. Veres said the government will next week announce the targeted deficit figure for 2007, which is expected at Ft 1.76 trillion this year. The budget will include reserves of 3% of the total to ensure Hungary reaches its goal, Veres said, adding the government will submit the draft to parliament October 31 and lawmakers will vote on it Dec. 22.
Hungary, which has missed its deficit target every year since 2001, yesterday revised its annual shortfall forecast to Ft 1.755 trillion, or 7.5% of GDP, from Ft 1.759 trillion, or 7.6%. The government probably will meet its budget deficit goal this year and next as spending cuts begin to take hold, a survey of economists shows.
Hungary aims to reduce the budget deficit to a third by 2009, which would allow the country to adopt the euro two years later. The government in July scrapped its official entry date of 2010 and has yet to set a new one.