Budapest (MTI) – Hungary has an economic policy resolute on taking the necessary steps to balance the budget, the economy minister said at a conference on Saturday.
It will be no easy task, but measures must be taken to expand employment, improve competitiveness and implement developments in industrial policy, Mihály Varga said at the “Falling public debt – expanding economy” conference organised by economic researcher Szazadveg.
He confirmed that Hungary could balance its budget — in cash flow-based terms — in just a few years. A few years after that, it can balance the budget according to the European Union’s accrual-based accounting rules, he added.
Varga noted that Hungary had reduced its public debt as a percentage of GDP by 8.2 percentage points to 75.5 percent since 2010, more than any other EU member state. Hungary is in an exclusive club of countries, together with Germany, Latvia and Poland, that could keep cutting their public debt in spite of the global economic crisis, he added.
Árpád Kovács, who heads the Fiscal Council, told the conference that improved economic performance, a further increase in budget revenue and disciplined fiscal policy when it comes to expenditures could give Hungary a balanced budget, according to EU accounting rules, sooner or later. If economic growth averages 2.5 percent, Hungary could bring its public debt under 60 percent of GDP by 2027, but the threshold could be reached sooner if the budget is balanced or runs a surplus, and if GDP growth is faster, he added.
László Domokos, the chairman of the State Audit Office, also stressed the importance of reducing Hungary’s public debt. Improved tax collection and a crackdown on the shadow economy support the process, but efficiency also needs to improve on the expenditure side, where it would be advisable to cut some spending, he added.
András Réz, deputy-CEO of the Government Debt Management Agency, told the conference that 2015 was a turning point for Hungary’s public debt, with the majority now held by domestic investors and households, after a period of seven years. The proportion of debt in foreign currency also fell, from 50 percent in 2011 to 31 percent at the end of last year, he added.