Almunia: Ecofin recommendation places political pressure on Hungary
The Hungarian authorities are under political pressure now that the European Union finance ministers repeatedly recommended that Hungary reduce its excessive budget deficit, Commissioner for Economic and Monetary Affairs Joaquin Almunia said on Tuesday. As Hungary has not yet adopted the euro, it is not subject to penalties for running an excessive deficit as eurozone members are, Almunia said in response to a question. However, he noted that the EU is allowed to withhold cohesion funding if a member state fails to comply with budget rules. "If Hungary will not comply with the recommendations adopted today, this possibility will emerge," Dow Jones quoted Almunia as saying. Almunia said Hungary's program of fiscal adjustments was very ambitions, especially the plan to cut the deficit from above 10% of GDP to around 3% by 2009. He noted there were major risks involved in its execution. Finland's finance minister Eero Heinalouma, who headed the Ecofin meeting, said EU members expect Hungary to take fast, determined and sustainable measures by April 2007. Both the Commission and Ecofin will follow Hungary's progress, he said. Almunia praised the fact that Hungary has already implemented several of the measures contained in the programme but noted that some of the new ideas should still be clarified. Both Heinalouma and Almunia welcomed the Hungarian leaders' promise to report in six months on progress and the timetable and implementation rate of the measures. According to Almunia, reducing the deficit is important not only to meet EU regulations, but also because it is the only way for Hungary to close the gap with the rest of Europe. On Tuesday the EU finance ministers extended the deadline for Hungary from 2008 to 2009 to cut its deficit ratio to 3% of GDP but they also expect Hungary to take effective measures already by next April to meet its deficit targets for 2006 and 2007. (Mti-Eco)
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