Further savings announced
May 14th, 2013A pro-government columnist warns that Hungary cannot be sure of release from the EU’s excessive deficit procedure, despite all its fiscal zeal.
On Friday last week, Economy Minister Mihály Varga announced a freeze on almost 100 billion HUF in public spending in order to make it more difficult for Brussels to keep Hungary under its excessive deficit procedure. Hungary has been monitored as an overspending nation since it joined the Union in 2004. But last year it managed to keep its public deficit under the 3 per cent threshold and the last savings imposed by Brussels in September 2012 actually proved too severe, as the deficit was eventually kept below 2 per cent. In its latest estimate the European Commission forecast a 3 per cent deficit for this year and a 3,4 per cent deficit for 2014 (See BudaPost, May 5). Financial Commissioner Olli Rehn said Hungary should take further fiscal measures to shake off the excessive deficit procedure. The government reacted with an immediate freeze of about 0.75 per cent of total expenditures, and promised cuts in spending and an increase in banking or utility taxes if necessary.
In Magyar Nemzet, Anna Szabó sarcastically remarks that Olli Rehn behaves as if he were Hungary’s Finance Minister. Hungary is among the very best pupils in headmaster Barroso’s school, with a public deficit of 1.9 per cent of GDP, yet is still ordered to perform ever newer exercises by P.E. teacher Olli Rehn, while other pupils with less brilliant records are exempted. “The whole procedural circus has very little to do with actual figures,” Szabó contends. The Commission lay idle for years in the face of the inflating debt bubbles of Greece and Italy, while Hungary was kept firmly under the excessive deficit procedure. Now, all of a sudden, an alleged 0.4 per cent difference expected for next year seems too much to bear for Brussels. Hungary has announced savings amounting to several times that rate. “We may hope to be treated fairly”, Szabó concludes, “but should not be overly optimistic.”