Hungary’s 2010 Budget Act does not fully meet the stricter requirements of the Acts on public finance and on budget responsibility, the Fiscal Council, a body designed to review fiscal policy independently of the government, said on its website.
Hungary’s parliament approved the act without the modifications required to amend several shortcomings, the council said in the announcement.
The Fiscal Council noted that it had repeatedly warned of the bill’s shortcomings during parliamentary debate, the last time in a statement issued on November 19 when it expressed confidence that Parliament would pass the necessary amendments before the final vote was taken on November 30.
The shortcomings of the Act, listed by the Council, are the following:
- The act does not include data regarding 2009 budget expected performance that served as a basis for the planning of the various 2010 budget items which is against the general government act;
- neither the content or the place of the list of external budget items — those governed by other laws thereby falling outside the scope of budget acts — meet the requirements set by the general government act;
- some of the items listed as uncapped budget items — those which could be exceeded without parliamentary approval — do not meet the respective requirements;
- and the Act specifies targets regarding the 2011 and 2012 fiscal balance as a percentage of GDP instead of setting them in nominal terms as required by both the act on public finance and the act on fiscal responsibility.
The council noted that President Laszlo Solyom drew attention to these failures in a recent interview.
In an interview published in the weekly Heti Valasz, Solyom said while the 2010 government budget “…undoubtedly does not contain the type of tricks whose presence in previous budgets numbered in the hundreds, but they did place unlawfully elastic regulations in it such as the so-called upwardly open items that enable the government to overspend at any time.”
The finance ministry rejected Solyom’s statement, claiming that the Budget Act conforms in every aspect to the stipulations of Hungary’s public finance law. The ministry noted that the budget was positively assessed by the European Union, the OECD as well as investment banks.
The three members of the Fiscal Council were elected in unity between MPs this February. Under the law, the council members have been elected for a mandate of nine years. Member of the National Bank of Hungary’s rate-setting Monetary Council Gyorgy Kopits has been elected to chair the council, and its members include another rate setter Gabor Oblath and Hungarian Academy of Sciences member Adam Torok.