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Hungary's economy pulls through hardest period: PM

Hungary's economy has gradually pulled through the hardest and most complicated period in its history, Hungarian Prime Minister Ferenc Gyurcsány said on Monday.

The fiscal deficit and inflation rate have declined as planned, and now that the grey economy has been gradually eliminated, there is a core basis for a sustained and healthy growth in the national economy, Gyurcsány said in an address to Congress. By the end of this year, the proportion of fiscal deficit in GDP will drop for the first time in years, while the inflation rate will also decline to a more manageable level, he said. The fiscal budget will reach an economic balance by 2009, he said.

„Nevertheless, further economic adjustments are still needed,” the prime minister said, saying that the government will start reforming the taxation system, encourage the development of small and medium-sized enterprises, and opening up to southeast Asian countries. The fiscal deficit reached a record 9.2% of Hungary's GDP in 2006, which seriously deterred its economic development. In September 2006, the government began to adopt a series of financial deflation policies, reducing subsidies and increasing the taxation income. (