Budapest, February 22 (MTI) – A balanced budget, calculated with EU rules, is now “within reach” for Hungary, an economy ministry state secretary said on Monday.
Péter Benő Banai said the ministry has started putting together the 2017 budget and is considering a number of scenarios for achieving a balanced budget with zero deficit.
Further economic growth and economic whitening will be needed to achieve the goal, he said.
Extra expenditures and revenues aside, a balanced budget would require the elimination of a 700 billion forint (EUR 2.3bn) deficit, which amounts to 2 percent of GDP, he said, adding that the government will also take into account the effects a budget with zero deficit would have on the real economy.
A balanced budget would require a GDP growth rate of 3 percent, which would mean 450 billion to 500 billion forints in additional revenue, he said, adding, however, that this calculation does not take into account government spending on the home-subsidy scheme. Some of the government’s red tape reduction measures will result in spending cuts, which could improve the budget balance, he said.
Banai said the inflow of EU payments that were delayed last year will have to reduce public debt by more than one percentage point in 2016, but economic growth and exchange rates will also have an effect on public debt. He said the arrival of the previously delayed funds worth 700 billion forints will reduce public debt without affecting the ESA deficit.
The state secretary said besides the bank levy, the government does not plan to reduce any of the other special taxes.
Banai said given that the upgrade of the Paks power plant is being overseen by the government, the project will increase both the ESA deficit and public debt, which has been taken into account.
Ágnes Hornung, state secretary in charge of finances, said Hungary will begin the drawdown of its Russian loan for the Paks upgrade once the European Commission approves the project’s finances and all other questions surrounding the project are settled. If the EC approves the finances, the drawdown could begin in the second half of the year, she said.
Banai said revenue from the sale of state assets will likely exceed the 130 billion forints of revenue estimated in this year’s budget.