Hungary’s tax centralisation will reach 39.4pc of GDP in 2010, a decline of almost two percentage points in less than two years, and real wages will rise, Finance Minister Peter Oszko said at a press conference on Tuesday.
The budget consolidation until now has served to create balance, Mr Oszko said. The 2010 budget aims to maintain the balance and improve Hungary’s competitiveness, he added.
Hungary’s economy is set to contract by 0.6pc in 2010 after contracting 6.7pc in 2009.
The government will place the stress on forint-based securities issues to finance the budget next year, Mr Oszko said, answering a question. Foreign currency financing earlier came into the foreground as Hungary drew on its IMF-led financial support package, he added.
The 2010 budget targets a primary surplus — the general government balance excluding interest expenditures — of 0.7pc of GDP. It targets an accrual-based deficit of 3.8pc of GDP.
Asked to comment about the National Bank of Hungary’s projection for a 4.2-4.3pc of GDP general government deficit in 2010, if the government frees up all of its stability and interest rate risk reserves, Mr Oszko said, “This government will do no such thing, and I hope the next one will not do so either.” The NBH also acknowledged the deficit would reach 3.8pc of GDP if the reserves are not freed up, he added.
Next year’s budget contains HUF 206bn of reserves. This year, the government used HUF 32bn from general reserves.