Institute: Fiscal loosening could bring growth close to target this year

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Fiscal loosening could lift GDP growth close to the governmentʼs 2.5% target this year, according to the Fiscal Responsibility Council (KFIB), Hungarian news agency MTI reported yesterday.

KFIB, established by the former director of the Fiscal Councilʼs research division, which was phased out in 2010, puts Hungaryʼs economic growth rate at 2.4% this year, managing director Balázs Romhányi said yesterday. It sees growth decelerating to 2.3% in 2017, he added.

The government targets GDP growth of 3.1% in 2017.

Without the fiscal loosening, which KFIB put around HUF 360 billion for 2016 and HUF 500 bln for 2017, growth would be just 1.3% this year and under 2% next year, Romhányi said.

He added that some HUF 540 bln in corporate tax payments related to a growth tax credit by the local unit of General Electric would have to be booked in 2015, according to Maastricht rules, and could not be used as resources for fiscal loosening in 2016 and 2017.

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