Hungary budget has significant reserves, says Fiscal Council head (adds State Audit Office head)

Budapest, October 4 (MTI) – The government has created room for a significant buffer in next year’s budget, the head of the independent Fiscal Council said on Thursday in Sopron, W Hungary.

This is needed to handle uncertainties on the international markets and measures taken by individual states to fend off the crisis, Arpad Kovacs said in a keynote speech at a conference on accountancy and taxation.


The reserve, similar in size to this year’s, is worth several hundreds of billions of forints. Accordingly “we fit below the Maastricht criteria” even if Hungary sees an economic drop of 1 percent of GDP, he added.


Head of the State Audit Office Laszlo Domokos told the conference that although the 2013 budget had been accurately drawn up, the draft carries several risk factors, and an effective budgeting requires a firm financing background.


Domokos said the most significant external risk was the very uncertain international financial and economic environment in which the budget is being prepared, including uncertainty in the euro zone which adds to uncertainty on the money markets. Another risk factor is in the export growth outlook, which, in case of a deterioration, could affect the budget negatively, he said.


The country’s macroeconomic projections were also surrounded by uncertainty, Domokos added. He said the new economic policy environment called for new methods, and reserves were of key importance, even if funds were not abundant.


The 2012 budget had a buffer of 520 billion forints, which guaranteed that so far the budget deficit target could be kept without major adjustments, he said. He said however that those reserves have been depleted by now and there were no “free funds” in the central budget this year.


Domokos predicted that 70 percent of the planned tax revenue target would certainly be met this year while the rest could fall short of the target.


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