PM says continued austerity to ensure growth in 2011

The minority Socialist government will go on with its crisis management programme until the general elections, and if the next government proceeds along the same lines, Hungary will see economic growth of up to 4 percent in 2011, Prime Minister Gordon Bajnai told MTI on Sunday.

The government will “continue the implementation of its austerity programme until its very last day in office, because the crisis does not consider political cycles or campaigns,” Bajnai said.

Bajnai praised “the sacrifice people had made in 2009 and 2010″ and said that it had enabled the government retain the cohesion of society, and protect the crucial components of life: jobs, welfare services and solidarity.

In 2009 the government proved that putting an end to the “wasteful economy” of public institutions was an efficient policy, which must be continued in 2010, Bajnai said. He added that the full-fledged ramifications of the crisis could only be felt in 2010, which would make it too early to start increasing redistribution.

“It will make it difficult for the current government and will require a lot of discipline from the next one to come,” he said.

Unless the next government deviates from the current path of austerity, it could generate a surplus of approximately 2,000 billion forints (EUR 7.35bn) during the next four years, Bajnai said, but warned that that amount should not be dished out to fulfill campaign promises but “spent wisely” on the country’s debt service, improvements in public administration, efforts to cut taxes and control the budget deficit.

On another subject, Bajnai said that the country’s key financial data would be made available to “all democratic parties in the elections as “open books”. It will ensure that election programmes are built on the same knowledge base and no one talks about “skeletons in the cupboard” later on.

Concerning the radical nationalist Jobbik party, Bajnai said that he did not consider it a democratic outfit and that “it should be quarantined by all democratic forces,” excluding any cooperation.

Outlining the government’s plans in its last four months before elections expected in April, Bajnai said changes would include working out new rules for consumer protection against unfair business conduct by public utility services, closing the gap between higher education and the labour market, reducing red tape and helping job retention, supporting Roma integration and plans for the “bank of the poor” project. He added that he had no plans to reshuffle the government in this last phase of office.

Bajnai said that changes introduced on January 1, 2010, included a drop in the value-added-tax on district heating from 18 to 5 percent, a wider base of crimes which are investigated by default, the adoption of a “code of ethics” for banking practices, and rules making it easier for a parent to return to work after childcare leave. Offshore companies will pay 30 percent tax at the source, the monthly minimum wage will rise (to 73,500 forints or 272 euros), and pensions will rise faster than inflation, he added.