‘Substantial fiscal effort’ needed in 2018, says EC

Initiatives

In 2017 and 2018, Hungary should pursue its fiscal policy in line with the requirements of the preventive arm of the Stability and Growth Pact, which translates into a substantial fiscal effort for 2018, the European Commission said in its draft country-specific recommendation published Monday, reported by state news wire MTI.   

The Commission prepared and published the recommendation, including an opinion on the 2017 National Reform Program of Hungary and the 2017 Convergence Program, as part of the 2017 cycle of the European Semester of economic policy coordination. The recommendation offers a blueprint for final recommendations by the European Council for Hungary.

When taking policy actions, the EC said consideration should be given to achieving a fiscal stance that contributes to both strengthening the ongoing recovery and ensuring the sustainability of Hungaryʼs public finances.

The Commission advised Hungary to complete the reduction of the tax wedge for low-income earners and simplify the tax structure, notably by reducing the most distorting sector-specific taxes. It also recommended strengthening transparency and competition in public procurement by implementing a comprehensive and efficient e-procurement system, and strengthening the anti-corruption framework.

The EC advised Hungary to better target public works schemes to those furthest away from the labor market, and to provide effective support to job seekers to facilitate transition to the labor market by reinforcing active labor market policies, among other things.

The EC said Hungary should take measures to improve education outcomes and to increase the participation of disadvantaged groups, in particular Roma, in inclusive mainstream education. In addition, the adequacy and coverage of social assistance and the duration of unemployment benefits needs to be improved, the EC said.

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