Orbán cabinet reduces 2020 deficit target

Hungary’s government targets a 1.0 percent-of-GDP deficit next year, an assessment of the 2020 budget bill by the Fiscal Council released on Monday shows.

The target is under the 1.5 percent-of-GDP target in Hungary’s updated Convergence Programme submitted to Brussels in April.

The Fiscal Council, established by lawmakers to issue opinions on the planning and execution of the budget, said the 2020 deficit target is achievable.

The council said further measures to improve tax compliance would be necessary to achieve the revenue targets in the budget draft. It added that bigger fiscal reserves, contained in the bill, equivalent to 1 percent of GDP, would provide a buffer against any possible shortfall.

The 4.0 percent GDP growth assumed in the budget is achievable if the targeted increase in wages and household consumption materialises, the council said, adding that further measures to improve competitiveness would also serve to help reach the growth target.

The council noted that part of the impact of recently announced tax cuts had not been included in the budget bill and presents risks. It is necessary to include the impact of all government measures in the bill, it added.

The package of tax cuts and growth incentives was unveiled by Finance Minister Mihály Varga on May 30. (Read details HERE)

The government is scheduled to submit the 2020 budget bill to lawmakers in the afternoon on Tuesday. The final vote on the budget could take place on July 12.