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Hungary aiming for 4.1 pct budget gap, 4.5 pct inflation and 2.8 pct GDP growth in 2008

Hungary aiming for 4.1 pct budget gap, 4.5 pct inflation and 2.8 pct GDP growth in 2008

The Hungarian government on Wednesday approved the 2008 state budget plan, planning for a budget deficit of 4.1 percent of gross domestic product, an annual inflation rate of 4.5 percent and GDP growth of 2.8 percent next year.
"The 2008 budget, like that of 2007, will be strict and tight, but there will be no need for further austerity measures and the further fall of incomes," Finance Minister Janos Veres said.
"As a result of the measures introduced since last summer, Hungary's (economic) balance has improved substantially," Veres said, adding that current projections indicated that Hungary would be able to meet the economic criteria needed to switch to the euro currency in 2009.
Over the past three years, Hungary has had one of the highest budget deficits in the EU and anti-government protests and riots broke out last September after the broadcast of a private speech by Prime Minister Ferenc Gyurcsany in which he admitted lying about the economy to win the parliamentary elections in April 2006.
Since mid-2007, the government has introduced a series of unpopular austerity steps, such as new health care fees and university tuition for most students. Thousands of public employees have been fired and plans for tax cuts canceled.
Real incomes are expected to fall by around 4 percent this year, while in 2008 they would grow by up to 0.5 percent, with domestic consumption expected to rise by 0.4 percent, the finance minister said.
After planning for a budget gap of 6.4 percent in 2007, the lower deficit next year would be partly the result of lower interest payments, Veres said.
He also said the government was continuing its efforts to reduce the shadow economy, which is estimated to make up around 18 percent of the total.
Veres said measures to increase legal employment and boost taxation would result in extra revenues for state coffers of around 50 billion forints (euro200 million, US$280 million) this year, with a similar figure expected in 2008.
Parliament will begin debating the draft budget next week and is set to approve the bill in mid-December.


Updated : 2021-10-17 01:40 GMT+08:00