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Hungary’s parliament passes 2008 budget with 4% deficit

Hungary’s parliament on Tuesday approved a draft 2008 budget that sets the deficit target at 4% of GDP, lower than the 4.1% target set in last December’s convergence program.

The budget is planning for revenues of Ft 7.9 trillion ($45.52 billion) and spending of Ft 9.02 trillion, leaving a budget deficit of Ft 1.12 trillion. Hungary’s government is in the middle of economic reforms that aim to bring the budget deficit down to 3.2% by 2009 - a massive cut from the EU’s largest deficit of 9.2% in 2006.

The government then aims to cut the deficit to the 3% level required to adopt the euro. The deficit target for 2007 in 6.4%, but the government says it now expects this to be beaten. Parts of the government’s reforms, which included tax and energy price hikes, are aimed at sorting out social spending, and the 2008 budget aims to run a surplus in the social security fund of Ft 1.95 billion. It also aims for the pension fund to break even. Parliament is expected to further debate the budget next week. (m&