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Hungary must not loosen its budget before key parliamentary elections in 2006 despite having greater room for manoeuvre due to a recent EU ruling, Hungarian Finance Minister Tibor Draskovics said on Saturday. "At these times, however close the 2006 elections may be, we must not loosen (fiscal policy) by increasing the deficit," daily Nepszabadsag quoted Draskovics as saying. The EU recently allowed Hungary, and other EU countries which have carried out pension reforms, to reduce their deficits over a period of five years through the impact of transfers to mandatory private pension funds.
For Hungary, this means that in 2008, by which time the country must meet eurozone entry criteria, it can correct its deficit by around 0.48 percent of GDP.
This assures that it can bring its budget deficit down to below the required three-percent ceiling with greater certainty.
Draskovics's comments about fiscal discipline on Saturday echoed those of Prime Minister Ferenc Gyurcsany, who has repeatedly vowed not to engage in a spending spree before he must face opposition Fidesz in the 2006 elections.
But despite these pledges analysts are still sceptical concerning the achievability of the Socialist government's fiscal targets for 2005.
Draskovics also said that Fidesz's proposals for comprehensive tax reform would more than double Hungary's budget deficit.

Copyright Reuters, 2005

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