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PM announces 8% fiscal deficit projection

Prime Minister Ferenc Gyurcsány said Hungary's public finance deficit will amount to 8% of GDP this year and pressed for reforms in his opening speech in Parliament on Thursday, when he submitted the new government program for a two-day debate.

Gyurcsány said the budget had to be adjusted this year to create a fiscal balance. He added that state reform is needed in order to establish a service-provider state that is also in charge of developments and investments. This requires spending cuts, Gyurcsány said. The government's new forecast is way over its earlier firmly supported deficit target of 4.7% of GDP, adjusted for the effects of pension reform.
Economists and international economic forums have been indicating for some time that the fiscal deficit would overshoot to 8.5%, or, excluding the pension reform, to 10% of GDP in 2006, using European Union methodology.