Fiscal Council: credibility may ease burdens

Although there are tensions in the Hungarian national budget this year, the undertaken target, 3.8 per cent of GDP, can still be met with strict control. That is according to the analysts of the Fiscal Council of the Republic of Hungary. Their latest report calculates with roughly HUF 70 billion overrun in the budget, but they believe this much can be controlled with consistent fiscal stringency.

The report suggests that if the fiscal policy is put on a sustainable path and remains there, then the credibility built up within a few years will significantly reduce the public and private interest charges, as well.

The analysis shows that next year, the deficit may be near the 3% target undertaken in the convergence program for 2011 if the planned tax to be levied on financial institutions (or equivalent taxes) is collected.

The Fiscal Council forecasts the Hungarian economy to grow by 1% this year, 2.9% next year and 3% in each of the following two years. Consumption by households that decreases this year, is likely to start to grow from 2011, while the inflation rate – foreseen as 5.1% this year – will be around 3% in each of the following three years, while the rate of unemployment, estimated as 11.2% this year, is likely to decrease somewhat year by year.

The Fiscal Council, created by an act of parliament, is an independent state institution that endeavors to ensure the responsible management of public resources. To this effect, it prepares assessments of the budgetary consequences of government and parliamentary decisions.