Hungary will need to cut between 1 percent and 1.5 percent of GDP off spending to meet an IMF and EU budget target this year, but the government also needs to kickstart growth, Hungarian Economy Minister Gyorgy Matolcsy said yesterday.
In several appearances as the government strives to repair damage to its credibility with markets after a sell-off last week, Matolcsy said Hungary would stick to the 3.8 percent deficit target agreed with lenders for this year.
He told CNBC television that there were blunders in government communication last week, but “it is blatant that Hungary is not Greece.”
Comments by officials that Budapest’s debt problems gave it a slim chance of avoiding a similar fate to Athens, knocked the euro back on Friday.
“We’ll stick to our 3.8 percent budget deficit level for this year. It was agreed by the IMF and the EU and it was also agreed by the Hungarian government so there is no doubt about that, we’ll stick to that figure,” he said.
“On the one hand it’s clear cut again there is no need to have an austerity plan — on the other hand, there is no option to have a fiscal stimulus package — so we’ll have an action plan on the part of the new government, we’ll cut budget expenditures [and] on the other hand we’ll boost revenues.”
Matolcsy also reiterated that the government plans to cut taxes. After a meeting of the new center-right Cabinet to discuss its economic program at the weekend, it remains unclear that can be squared with containing the deficit at 3.8 percent.
“One cannot helped being puzzled when Hungarian officials talk about a much larger than planned budget deficit and at the same time rules out austerity measures and instead promises tax cuts,” Danske Bank analyst Lars Christensen said.
Comments by a Fidesz party official and the prime minister’s spokesman comparing Hungary to Greece drove the forint lower , caused a selloff in government bonds and helped send the euro to a four-year low against the dollar on Friday.
At the weekend, top government officials launched an attempt at damage control, describing comparisons to Greece as “exaggerated” and insisting Hungary would aim to meet the deficit target.
Matolcsy, speaking on CNBC, said that by the end of last month, the budget deficit had reached 87 percent of the full-year target but the government will keep the deficit under control. And while there was no need for an austerity package, having a fiscal stimulus package was not an option now.
The forint rose more than half a percent in morning trade.
Most economists say Hungary is in a much stronger position than Greece. Its deficit and debt ratios to GDP are not nearly as high; public debt was about 80 percent last year, compared with 133 percent projected for Greece this year. It also ran a current account surplus last year and had a budget gap of 4 percent after deep spending cuts.
The government started a three-day meeting on Saturday and was expected to decide on an action plan by the end of yesterday.
Matolcsy said the government was examining possibilities for a flat tax of between 15 percent and 20 percent in personal income taxation which should be linked with family taxation.
“As we see now, and the government is preparing to make such a decision, that from Jan. 1 next year, a flat family tax could be introduced and finalized over a period of two years,” Matolcsy told TV2 television.
Matolcsy also said there was a proposal on the government’s table which would abolish up to one-fifth of 58 different types of taxes existing now and he hoped a radical three-year tax cutting program could be launched already this year.
‘NO SECURITY RISK’: The Railway Bureau reassured the public that the technicians’ activities were limited to technical guidance and did not involve sensitive systems The Railway Bureau yesterday said it had invited eight Chinese technicians to assist with an airport MRT construction project. The bureau issued the confirmation after an Internet user said Chinese nationals had entered the construction zone of Taiwan Taoyuan International Airport’s Terminal 3 project. They asked why “individuals from an enemy state” were allowed access to such a major national infrastructure project, which raised serious concerns over Taiwan’s industrial safety, sensitive systems and information security. The bureau’s Northern Region Engineering Branch Office said subcontractor Taiwan Handle Industrial Co (台灣手把工業) of the Taoyuan airport MRT’s “Contract No. CU05 Project A14 Station Civil, MEP &
A US uncrewed surface vessel (USV) encountered multiple Chinese warships during an autonomous transit of the Taiwan Strait, US defense company Seasats said in a statement on Wednesday. Seasats announced that a Lightfish USV had completed the first autonomous transit of the Taiwan Strait. Over five days, the USV traversed the entire length of the Strait while constantly monitoring surface vessel traffic, the company said. The Lightfish encountered multiple Chinese warships, one of which was a Chinese People’s Liberation Army Navy (PLAN) Type 056 corvette, it said. The Chinese vessels were operating “well within Taiwan’s exclusive economic zone without transmitting their identity via the
‘BOOMING’: ’ The number of partners we have here is incredible. You can see from their stock prices. They’re doing so well, they’re so happy,’ Jensen Huang said Nvidia Corp’s spending in Taiwan has ballooned to about US$150 billion a year, 10 times the US$10 billion to US$15 billion the company spent five years ago, Nvidia chief executive officer Jensen Huang (黃仁勳) said yesterday, suggesting Taiwan’s strategic importance in the global artificial intelligence (AI) supply chain. “Taiwan is the epicenter of the AI revolution. This is where the chips come, packaging comes. This is where the systems are made. This is where AI supercomputers were created,” Huang said at a meeting for the company’s employees in Beitou-Shilin Technology Park (北投士林科技園區) in Taipei, the planned site of Nvidia’s Taipei headquarters. “Taiwan
GREATER REACH? Auto parts and wood products would face tariffs of up to 15%, matching those targeting the EU, Japan and South Korea, Vice Premier said The US has announced that preferential tariff treatment for Taiwan’s non-semiconductor Section 232 goods would take effect retroactively from May 1, the Executive Yuan said yesterday. The US government yesterday posted a notice on the Federal Register’s public inspection Web site previewing tariff concessions for Taiwan under a memorandum of understanding (MOU) on Taiwan-US investment after two months of negotiations. The MOU signed on Jan. 15 stipulated three major preferential tariff arrangements: a 15 percent “reciprocal” tariff rate for Taiwan without stacking most-favored nation (MFN) rates; preferential Section 232 treatment for semiconductors and related products; and preferential Section 232 treatment for non-semiconductor
RSS