Parliament approves HUF 74.4 billion deficit increase
Parliament on Wednesday approved an amendment to the 2013 budget that raises the deficit by HUF 74.4 billion to HUF 1.1252 trillion due to higher spending on the integration of the country’s savings cooperatives and a European Commission-ordered repayment to oil and gas company MOL.
The amendment was passed by a vote of 215-42.
The amendment raises the allocation for savings cooperative integrator SzHISz by about HUF 35.5 billion from HUF 100 billion to cover the acquisition of a stake in postal company Magyar Posta.
The government recently issued a decree on making preparations for the sale of the 25pc-minus-one-vote stake in Magyar Posta to SzHISz. The National Development Ministry said the transaction would establish cross-ownership that guarantees cooperation between savings cooperatives and Magyar Posta.
The government-initiated integration of Hungary’s savings cooperatives aims to create synergy and allow savings cooperatives to meet stricter European Union capital adequacy requirements. Legislation on the integration was approved by Parliament in July.
The amendment approved by Parliament on Wednesday also allocates HUF 35.3 billion to repay MOL because of a European Union Court of Justice decision overturning a resolution by the European Commission.
The Court of Justice in November annulled a 2010 resolution by the EC ordering Hungary to recover more than HUF 30 billion in illegal state aid to MOL. The court said there was no data to show MOL received favorable treatment compared to its competitors with regard to mining royalties.
The EC ordered MOL to recover the aid in June 2010 after an investigation found that an agreement between MOL and the government in 2005 fixed mining royalties for most of the company’s fields in Hungary until 2020. Although royalties were raised by an amendment to the Mining Act in early 2008, MOL continued to pay the same royalties agreed on earlier, according to the EC.
Clearing the amendment for the final vote, the Fiscal Council said the changes would conform to rules on state debt in the constitution as the debt will fall as a percentage of GDP, though rising in nominal terms. It said an official stand had not yet been taken on how to book the higher expenditure on the savings cooperative integration according to European Union accounting rules, thus creating a source of uncertainty with regard to achieving the deficit target.
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