Hungary: Never failing to surprise

The European Commission should release Hungary from its Excessive Deficit Procedure this year, provided it looks “only at the figures”, an Economy Ministry official said on Tuesday. State secretary Zoltan Csefalvay was speaking on the day the Hungarian statistics office KSH announced that the budget deficit in 2012 was equivalent to two per cent of GDP, or 2.1 per cent using the EU’s ESA95 accounting standard. Either way, it was just two-thirds of the Maastricht treaty limit.

Hungary has been under the Excessive Deficit Procedure since joining the European Union in 2004, with the government’s inability to meet the official limit for budget overspend having reached its nadir in 2006 when its deficit exceeded nine per cent, the highest in Europe in that pre-crisis year. Subsequent austerity measures came too late, as the country was hit by the global financial turmoil in 2008, forced to accept a 20-billion-euro bail-out from the International Monetary Fund and EU, and plunged into a deep recession in 2009.

The right-wing government of Prime Minister Viktor Orban managed to bring the deficit within the three per cent threshold in both 2011 and last year, but this was achieved by imposing heavy crisis taxes on banks and profitable sectors of industry, and coercing citizens into transferring private pension savings to the state with the threat of a loss of future entitlement that subsequently proved to be hollow.

Read the full story at The Budapest Times.

(Hungarian prime minister Viktor Orban. Photo: European Parliament)