Prime Minister Ferenc Gyurcsany said on a Wednesday-morning television program that Hungary’s economy is likely to contract by between 2-3pc in 2009, compared to the projected 0.9pc contraction contained in the government’s 2009 budget adopted in December.
Gyurcsany commented that Hungary cannot diverge from its current path toward budgetary balance, adding, however, that no budgetary numbers are etched in stone.
The prime minister noted that a deterioration in the state of the global economy since the fall has reduced expected inflation in Hungary, thus making it necessary to revise all the government’s economic plans.
Gyurcsany excluded the possibility of a tax increase, remarking that a tax hike would not help to resolve Hungary’s main current economic problem of inadequate growth. The prime minister said that while current conditions are not suitable for a tax cut either, Hungary’s tax burden must be redistributed.
With regard to the main direction of impending changes to the government’s economic policies, Gyurcsany said that intervention is necessary in the areas of employment, taxes and social subsidies in order to reduce budget expenditures.
Mr Gyurcsany noted during the television program that over recent days he had personally notified Prime Minister Robert Fico of Slovakia on several occasions that Hungary had the necessary capacity to export gas to Slovakia. Hungary’s prime minister referred to the gas dispute between Russia and Ukraine as a “Childish, undignified game that is unacceptable for the European Union,” adding that though it is not easy to determine the truth in a “flea market dispute” such as that currently taking place, it seems as if the Ukrainians bear a greater responsibility for the conflict. Mr Gyurcsany commented that it must be made clear to both Russia and Ukraine that their dispute strains their relations with Hungary.