Committee probe finds Ft 200 billion worth of “hidden items” in 2010 budget

An economic fact-finding committee has so far revealed more than 60 “hidden” items representing more than 200 billion forints (EUR 692.57m) in this year’s budget unaccounted for by the previous government, Deputy Prime Minister Mihaly Varga, head of the committee, told TV2 commercial television channel on Wednesday.

The body set up by Prime Minister Viktor Orban has revealed items ranging from 3 million forints to 100 billion forints, the latter caused by “bad planning of tax revenues,” Varga said.

The deputy premier told a press conference later in the day that he believes next year’s budget deficit would be around 3 percent of gross domestic product (GDP), “or even less, though it is too early to say”.

The most important result of the committee’s work is that it is now clear the government can keep this year’s 3.8 percent-of-GDP deficit target, Varga added. He said items unknown to the new government at the time of handover total an equivalent of 1.6 percent of GDP for 2010, but this has been offset by government measures aimed at balancing the budget. The impact on the 2011 budget stemming from these “hidden” items is estimated around 2.2-2.5 percent of GDP, Varga added.

The fact-finding report on the state of the economy and society also found that poverty has deepened and increased, demographic trends have worsened, employment levels are low and the population’s health condition is poor, Varga said, adding that the committee has prepared a 10-point set of recommendations.

Asked about the expected impact of Hungary’s obligations to service its debts, Varga said that just as it had done in the past, this would depend on the performance of the economy.

“Our economic performance will decide how difficult it will be to finance our debts. But money paid out for this will certainly be missing from other areas,” he said.

In a 100-day assessment of the new government on Tuesday, Prime Minister Viktor Orban said 2.858 billion forints (EUR 9.89bn) would be spent on servicing debts in 2011.