Finance Minister János Veres has backtracked on statements made last month that Ft 200-250 billion was available for tax cuts, reducing the expected figure by Ft 100 billion (€400 million).
The announcement came at a government conference in Szeged and was attributed to Standard & Poor’s recent downgrading of Hungary’s fiscal outlook from “stable” to “negative” and a recent surge in government debt yields. The government will be liable to pay an additional Ft 30 billion in interest payments in 2008 and a further Ft 70 billion in 2009, Veres said.
Veres went on to say that some of the shortfall can be made up through cutting expenditure, whitening the economy and restructuring taxation. He promised that bloated state administration and red tape would also come into focus, but that this would save less than Ft 100 billion.