Budgets of Hungary aimed at achieving a low level of Budget Deficit by introducing tax reforms, subsidy reforms and structural reform programs. According to a report by OECD, Hungary could achieve a low level of Budget Deficit,below 3% of GDP, by the year 2010.
Hungary Budgets always aimed at reducing the level of Budget Deficit. The Hungary Budget of 2007 was also of no exception. It targeted a low level of Budget Deficit and succeeded to reach the target.
According to a report by OECD(Organization for Economic Cooperation and Development), Hungary Budgets succeeded in lowering the level of Budget Deficit by introducing some strict policies. Some of these policies were :
Reduction of subsidies on the price of natural gas
Reduction of subsidies on the price of pharmaceutical drugs
Reduction in the number of hospital beds
Increase in the Tax Rates
Introduction of University Tuition Fees
In the year 2006, Budget Deficit of Hungary was 9.2% of the Gross Domestic Product(GDP) of the country. The Hungary Budget 2007, initially aimed at reducing the budget deficit to 6.8% of GDP. But, then, the Government of Hungary, readjusted its’ Budget Deficit Target and made the target 6.6%. According to the OECD Report, the Hungary Budget 2008, would propose a budget deficit target of 4.3%. The Report also suggested, that Hungary could achieve a Budget Deficit level below 3% of GDP, by the year 2010, if the structural reform programs are continued.
There were suggestions, that in the coming years also, Hungary would concentrate on lowering the Budget Deficit. But, there were some expectations, that the General Elections of 2010, could force Hungary to raise the level of Government Spending. The concessions, given to the Trade Unions of the Public Sector Organizations, was also anticipated to become an issue of concern.
According to Andrew Dean, an Economist of OECD, for making the budgetary consolidation plans successful, the Government of Hungary is required to come out of the political business cycle. Only then, the budgets of Hungary would be successful in placing the economy on a sustainable and convergent growth path.