BUDAPEST: The year has got off to a good start as far as the budget is concerned and it is possible the budget deficit may push below the target of 2 percent of GDP, the economy minister said on Tuesday.
Mihály Varga told a business event that tax receipts are growing and the treasury may close the month of January with a surplus of 92.2 billion forints (EUR 296m).
The government is drafting a strategy for the industrial sector with a view to boosting industrial output as a proportion to economic output from 23 percent to 30 percent.
The strategy endorsed by the cabinet last week will also help businesses to increase investments, he said. In the next few years, the government will concentrate on supporting the green economy, vehicle production, manufacturing and pharmaceuticals, he said.
Varga noted that the levy on the banking sector would essentially be halved this year, which he said would help to boost lending activity. Further, the government’s home-building scheme will also grease the wheels of private investment, he said.
Speaking later at an event in Budapest’s Corvinus University, Varga said that in the midst of current uncertainties in the world economy, Hungary must pursue a pro-active economic policy. From this point of view, the public debt level is a matter of importance.
Thanks to last year’s favourable macroeconomic trends, according to preliminary estimates, the debt in proportion to GDP is expected to have fallen to 75.8 percent by the end of 2015. Hungary should not return to looser fiscal policy in the years ahead, he said.
“That would not be worth trying again.” At the same time, excessive fiscal rigour is not the right response to potential challenges in the global economy, either, because it could hinder economic growth and increase unemployment, Varga said.
In connection with further tasks ahead, he said redistribution still takes a large chunk of the public finances and in order to reduce it state bureaucracy should be cut. The country’s assessment is improving and this year this must be reflected in decisions by the big international credit rating institutions, since the market has by now recognised the achievements and performance of the Hungarian economy, Varga said. Hungary’s economy is improving, shown by the fact that 560,000 more people hold jobs today than five years ago and two-thirds of them are in the private sector.
