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New reactions to adjustment package

October 9th, 2012

The editorial of a pro-government daily describes the package as a necessity under the constraints of the global economic crisis, while a centrist economist dismisses it as yet another unrealistic plan.

On September 5th, the Minister of National Economy György Matolcsy announced new measures to restructure the 2013 budget. (See Budapost October 8.)

Anna Szabó in Magyar Nemzet describes the proposed measures as necessary steps under the pressure of Europe’s economic crisis. As “printing money” proved inadequate, there is no alternative solution to restrictive measures anywhere in Europe or the United States. The previous governments, she writes, piled up massive public debt and now Hungarians must pay the price. Matolcsy’s proposed measures, she suggests, belie the opposition charge that this government favours the rich. The abolition of the cap on social security contributions will hit the well-to-do, while the planned fund to help businesses raise the necessary money to apply for EU funds will be at the disposal of small enterprises. Teachers, however, have indeed been sacrificed for now, although their promised pay raise has only been postponed by four months.

In the centrist Véleményvezér blog, an editorial dismisses Matolcsy’s proposals as incoherent and overly optimistic, calling it a “budget for a week”. Freezing teachers’ salaries will save the budget half of what is envisioned by Matolcsy, as about fifty per cent of those revenues would be channelled back to the budget through taxes and social security payments. The authors also question the wisdom of introducing electronic surveillance of retail transaction records by the National Revenue Authority (NAV), as the usual way to avoid taxes in retail, they claim, is to avoid recording transactions, not to manipulate records. The only realistic forecast, the author remarks, is the increase of the deficit target from 2.2 to 2.7 per cent of the GDP – which is dangerously near the 3 per cent threshold above which there looms yet another excessive deficit procedure, and the withdrawal of European cohesion funds.

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