EC: Further fiscal efforts likely needed for Hungary to avoid relaunch of EDP
Hungary should most probably has to take further fiscal consolidation efforts so as to avoid the re-opening of an excessive deficit procedure (EDP), because of slow debt reduction, in spring 2015, the European Commmission (EC) reported yesterday.
"In particular, compliance with the debt reduction benchmark would likely require additional fiscal consolidation efforts, in order to avoid that an inadequate pace of debt reduction could trigger the re-opening of an excessive deficit procedure in spring 2015," the Commission said.
The EC statement is part of memo prepared after the visit between June 24-27 of an EC mission to Hungary to review recent economic developments and policy initiatives in the context of post-programme surveillance linked to EU balance of payments assistance provided between 2008 and 2010.
Except for the reference of the risk of reopening the EDP against Hungary, closed just a year earlier, the warning as well as most of the remarks made in the memo are much in line with the 2014 country-specific recommendations endorsed by the European Council on 27 June.
The EC welcomed the recent economic pickup, as newly installed car industry capacities are boosting exports and industrial output and domestic demand strengthened.
It warned, however, that the economic recovery largely depends on stimulus measures (the central bank's Funding for Growth Scheme, cuts in regulated utility prices, the expansion of the public work scheme and the increased absorption of EU funds), and growth could slow as these effects fade away.
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