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Hungary exits EU excessive deficit procedure

June 24th, 2013

Left-wing columnists fear further austerity measures. A pro-government pundit notes that although the excessive deficit procedure has been lifted, the government should not expect an end to criticism from the EU. A conservative commentator, on the other hand, hopes that Fidesz will call a truce with the EU.

On Friday, June 21, the finance ministers of the European Union officially released Hungary from the excessive budget deficit procedure, as recommended by the European Commission (see BudaPost May 30).

Népszabadság recalls that the country had to pay a very high price for exiting the EU procedure. Since 2010, the government has introduced eight different austerity packages in order to reduce the deficit from 4.5 to 3 per cent of GDP. Some of the restrictions became necessary not because of the deficit procedure, but rather due to sluggish economic growth, as well as because of the introduction of the flat tax and the tax credits offered to families, Népszabadság suggests.

Writing in the same daily, Róbert Friss notes that the prospects of the Hungarian economy remain gloomy even after the lifting of the EU procedure. With the US Federal Reserve likely to end its quantitative easing programme soon, and the Chinese economy slowing down, the Hungarian government will have a hard time financing the budget from the markets in the absence of IMF backing, the left-wing commentator concludes.

In Magyar Hírlap, Csaba Szajlai writes that after leaving the EU procedure, the government needs to focus on economic growth. Stagnation is the result of the very same restrictive measures which helped to reduce the deficit, the conservative analyst continues. Boosting growth, however, will not be easy since the global credit crunch may set in again if the FED ends its money printing program and the Chinese asset bubble bursts.

Despite the end of the excessive debt procedure, we can expect new rounds of restrictions, since the deficit was cut through higher taxes, rather than through structural reforms, Miklós Bonta writes in Népszava. The left-wing pundit believes that multinational companies as well as Hungarian families should be prepared for more austerity measures to be announced in the near future in order to keep the deficit below the 3 per cent EU threshold.

Magyar Nemzet (print edition) reports on the EU decision, emphasizing that the government has successfully overcome the severe deficit created by the previous Socialist government.

In a separate opinion column in the same daily, Tamás Nánási notes that the government managed to cut the deficit with the help of the very unusual economic policies staunchly opposed by the EU. Instead of increasing the burden on families, the Hungarian government levied surplus taxes on multinational companies, the pro-government columnist writes. Those who resist reforms and “want to keep the status quo after the economic collapse” fear that Hungary has set an example by taxing “global capital” he continues. Although Hungary has reclaimed its financial sovereignty, multinational companies paying higher taxes will not stop lobbying international organizations in the hope that by exerting pressure on the Hungarian government, the surplus taxes will be withdrawn, Nánási concludes.

The decision provides a historic opportunity for the Orbán government, Bálint Ablonczy writes in Heti Válasz. In a bitter war fought over the past three years, Fidesz has sometimes directed far too harsh words towards the EU, which, on the other hand, has applied double standards against the Hungarian government, Ablonczy contends. The conservative columnist adds that the “permanent battle against Brussels” has helped to keep its constituency in constant combat mode, but now its supporters are getting tired of the multi-front freedom-fight. Ablonczy believes that after the symbolic victory which the lifting of the excessive debt procedure represents, the Hungarian government should bury the hatchet and seek a reconciliation with the EU.

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