The government presented its budget proposals to the parliament on 31 October 2006, on which it will vote at the end of the month. Hungary’s government wants to bring its budget in line with the requirements of the Stability and Growth Pact.
Hungary’s euro convergence plan has been previously approved by the Commission and Council. But the IMF, in its latest report, states that the country’s expectations of lowering the budget deficit to 3.1% by 2008 was overly optimistic. The IMF report predicts a budget deficit of 6.4%, which puts the Stability and Growth Pact target of 3% out of reach. Moreover, the report predicts that public debt will grow to 72.5% by 2010, thus still in excess of the Pact's target of 60%.
The report urges that the government use the present political window of opportunity “more aggressively to cut spending and implement budgetary controls”.
The IMF's findings will be a blow to the government’s hopes of fulfilling the euro convergence criteria by 2011/2012 (see EurActiv, 23 August 2006).
