“No Talk” Of EDP Against Hungary, Says Varga

  • 3 Jul 2014 9:00 AM
“No Talk” Of EDP Against Hungary, Says Varga
Economy Minister Mihály Varga said commenting on a critical report published by the European Commission that there was “absolutely no talk” about launching an excessive deficit procedure (EDP) against Hungary. In response to the EC’s criticism of the tax system, including sectoral taxes, Varga said: “Hungary has clearly stated that it has transformed its tax system, there is now a different system, and sectoral taxes play a part in this.”

Concerning the fostered jobs scheme, Varga said the government was committed to offering people work rather than benefits. The EC said in a report published on Tuesday that Hungary was likely to need further fiscal consolidation efforts to avoid the re-opening of an EDP, due to the slow pace of the country’s debt reduction.

“In particular, compliance with the debt reduction benchmark would likely require additional fiscal consolidation efforts, in order to avoid that an inadequate pace of debt reduction could trigger the re-opening of an excessive deficit procedure in spring 2015,” the report said. At the same time the commission acknowledged the recent pickup in economic growth, as newly installed car industry capacities were boosting exports and industrial output and domestic demand strengthened. London-based analysts said the commission’s report may have a positive effect on the budget.

Bank of America-Merrill Lynch said that the commission’s suggestion of a possible launch of an EDP “does not look good, but in reality is positive”.

The opposition E-PM party alliance said the report signalled the end of the “ostensible economic miracle” and ruling Fidesz’s propaganda bubble is starting to burst. Levente Pápa, the party’s economic spokesman, said the report was a sign that Hungary had returned to where it had started off after several years and that now new austerity measures are needed to maintain a fiscal balance.

Fidesz said the report from Brussels was “another go at putting pressure on the government to reduce the burden on banks and multinational companies.” It added that “to this, as always, the left is giving assistance with full force.”

Source www.hungarymatters.hu

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