Hungary will miss its 2005 public deficit/GDP target by a sizeable margin, concluded EU finance ministers in a strongly worded press release after an EcoFin meeting on 8 November. They also say that the 2006 deficit target has been "abandoned" and "even the new much looser target is unlikely to be met".
While a number of additional measures were taken in March and June, the Council "regrets that the 2005 target referred to in the Council recommendation of March 2005 will be missed by a sizeable margin and that contrary to previous commitments the government decided not to take corrective action".
In a repeat of what it said in March 2005, the Council has told Hungary "to make the timing and implementation of tax cuts conditional upon the achievement of the deficit targets".
"The Commission will want to see how Hungary plans to adjust its finances in its updated convergence programme due on 1st December," said Economic and Monetary Affairs spokesperson Amelia Torres to EurActiv. All member states must provide annual stability or convergence programmes to the Commission in December. This means that the Commission will come up with its recommendations for Hungary in December/January. Commission economic forecasts are due out on 17 November.
Commissioner Almunia says there is a theoretical possibility of suspending the country's cohesion funds, as reported earlier by EurActiv. As reported then, Hungary's deficit situation is set to worsen from 5.4% of GDP in 2004 to at least 6.1% in 2005. The country's draft budget for 2006 envisages a deficit target of 5.2%.
