Substantial fiscal effort needed in 2018 for Hungary to meet requirements – EC recommendation

Brussels, May 22 (MTI) – The European Commission recommends that Hungary in 2017 and 2018 pursue its fiscal policy in line with the requirements of the preventive arm of the Stability and Growth Pact, which translates into a substantial fiscal effort for 2018, the EC said in its draft country-specific recommendation published on Monday.

The commission prepared and published the recommendation, including an opinion on the 2017 National Reform Programme of Hungary and the 2017 Convergence Programme as part of the 2017 cycle of the European Semester of economic policy coordination. The recommendation offers a blueprint for the final recommendations by the European Council for Hungary.

When taking policy actions, consideration should be given to achieving a fiscal stance that contributes to both strengthening the ongoing recovery and ensuring the sustainability of Hungary’s public finances, the EC said.

The commission advised Hungary to complete the reduction of the tax wedge for low-income earners and simplify the tax structure, notably by reducing the most distortive sector-specific taxes.

It also recommended strengthening transparency and competition in public procurement, by implementing a comprehensive and efficient e-procurement system, and strengthening the anticorruption framework. It also noted the need to strengthen regulatory predictability, transparency and competition is particularly important in the services sector, notably in retail.

The EC advised Hungary to better target the public works scheme to those furthest away from the labour market and to provide effective support to jobseekers in order to facilitate transitions to the labour market, by reinforcing active labour market policies among others.

The EC said Hungary should take measures to improve education outcomes and to increase the participation of disadvantaged groups, in particular Roma, in inclusive mainstream education. In addition the adequacy and coverage of social assistance and the duration of unemployment benefits needs to be improved, the body said.