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Fiscal adjustment recommended for Hungary

D&T
May 18, 2016

The European Commission recommends Hungary to achieve an annual fiscal adjustment of 0.3 % of GDP towards the medium-term budgetary objective in 2016 and of 0.6 % of GDP in 2017. The EC also urges the government to lower sector-specific taxes, reduce the tax wedge for low-income earners and facilitate the transition from the public work scheme to the primary labour market, portfolio.hu reports.

The financial website says the three major recommendations are as follows:

In view of the high risk of a significant deviation from the medium-term objective (MTO), achieve an annual fiscal adjustment of 0.3 % of GDP towards the medium-term budgetary objective in 2016 and of 0.6 % of GDP in 2017, unless the medium-term budgetary objective is respected with a lower effort, by taking the necessary structural measures.

Further reduce sector-specific taxes and reduce the tax wedge for low-income earners. Strengthen transparency and competition in public procurement through eprocurement, increased publication of tenders and further improvement of the anticorruption framework. Improve the regulatory environment in the services sector and in the retail sector by addressing restrictive regulations and ensuring predictability.

Facilitate the transition from the public works scheme to the primary labour market and reinforce other active labour market policies. Improve the adequacy and coverage of social assistance and unemployment benefits. Take measures to improve educational outcomes and to increase the participation of disadvantaged groups, in particular Roma, in inclusive mainstream education.

D&T

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