European Commision cautiously accepts convergence plan

The European Commission (EC) in Strasbourg accepted the convergence plan filed by Hungary this month "with warnings" yesterday.

The most problematic area is employment, where the government is seen to be overly optimistic. The EC also expects Hungary to show some results by the time of the revision in April. The budget deficit has piled up, because plans were too optimistic, impossible expenditure was budgeted, taxes were cut and no reforms were carried out, the EC claims.

"The GDP growth forecast for 2009 is too high and the expected fall in inflation is too optimistic, nevertheless, the plan is feasible," wrote the EC. The convergence plan aims to cut the budget deficit from the 10.1% of GDP projected for this year, to around 3% in 2009. The earlier plan filed this spring set this target for 2008. The revised one expects total state debt to peak at 72.3% of GDP in 2008 and then subsequently decline.

EC Financial Commissioner Joaquín Almunia praised the plans but underlined the fact that there are still risks. The EU finance ministers council Ecofin still has to approve the convergence plan, most likely at their meeting in Luxemburg on October 10.

The written evaluation of the plan mentions no political risk, and thus says nothing about the possible resignation of Prime Minister Ferenc Gyurcsány, Napi Gazdaság notes. Finance minister János Veres also gave a presentation on pension reform plans.

The above story is just one of more than two dozen published today by Hungary Around the Clock, the most comprehensive source of daily English-language news about Hungary. For a free trial of HATC, click here. Hungarian news sources include Népszabadság; Magyar Hírlap; Világgazdaság; Napi Gazdaság; Magyar Nemzet; Népszava; Kossuth Rádió news and Hungarian television's nightly news broadcast.

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