Slovenia and Hungary need to take quick steps, EU says
In its latest exonomic forecast European Union issued warnings to Slovenia and Hungary Friday to move swiftly if the countries want to restart economic growth as recession and perceived fiscal laxity are taking their toll in Central Europe, the Wall Street Journal said. Slovenia might be the next candidate for a euro-zone bailout after Cyprus and needs a quick recapitalization for its indebted banks and promote both public and private deleveraging, said the European Commission. Any further delays in creating a bad bank to take over non-performing loans in Slovenia’s troubled, state-run banking sector would be ominous signs, the commission said. In Hungary, inaction could lead to the loss of EU funds for the recession-plagued country. The EU refuses to believe promises made by the government of Prime Minister Viktor Orbán, which says it’s targeting a budget shortfall of 2.7% of GDP for both this year and next. The EU says the country’s fiscal gap will rise to 3.3% next year from an expected 3% this year. Orbán’s government has been widely criticized for its unorthodox fiscal policy measures, especially for hefty taxes on banking, retail, telecommunications and energy. Some analysts have said that the taxes don’t address Hungary’s long-term fiscal structure, but rather cover up fiscal laxity.
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