Hungary needs further spending cuts to meet the 2010 budget deficit target, but revoking the crisis management measures as pledged by the opposition would bring the country to an immediate economic and financial collapse, Prime Minister Gordon Bajnai told national daily Nepszabadsag in an interview on Friday.
The government has taken most of the measures, including ones painful for society, required for crisis management but further steps should be taken to cut central expenditures significantly, he said.
Bajnai said that reducing the budget deficit to 3.9 percent of GDP in 2009 and 3.8 percent in 2010 under an agreement with the IMF and the European Commission would be a must for Hungary, something which is not a matter of political decision. To meet that target, additional significant spending cuts must be made in public administration, local government and public transportation, he said. For this reason, Hungary needs a strict budget for 2010, one that is not tailored to serve election campaign purposes.
Regarding the opposition’s repeated pledges of withdrawing almost all measures taken by the minority Socialist government, Bajnai warned that this policy would bring the deficit to an estimated 10 percent of GDP, and inevitably lead to an immediate collapse of the country’s finances.
The prime minister refuted claims that the government had not been stimulating demand, noting that due to the July 1 cuts in labour taxes, more money would be left in employee pockets to spend and more employers would be encouraged to create jobs.