The Hungarian Government shares the opinion of the European Commission concerning the majority of recommendations formulated for Hungary. These recommendations point out general strategic goals rather than concrete measures. The current proposals are more balanced in comparison to those in former years, and they better reflect achievements of the dialogue with the Commission during the European semester.

The Commission has adopted a fundamentally positive view on Hungarian labour market processes, they acknowledge Government measures in this field and they do not any longer question the adequacy of public work schemes. As it is also proposed by the document, the Government is aiming to ease the transition between public work schemes and private sector jobs, and stimulate jobseekers to make this move.

With regard to taxes, it has to be noted that the bank tax was halved at the beginning of this year, and it is set to be reduced further in 2017. Thanks to the Job Protection Action, the tax wedge of low income earners has been reduced substantially, but it also edged down due to a lower personal income tax rate.

As far as the Commission’s concrete fiscal proposals are concerned, the standpoint of the Government is that they have pursued a prudent fiscal policy and managed to reach fiscal targets. The steady decrease of the general government debt-to-GDP ratio proves this point. The deficit target laid down in the 2017 Budget Bill shows that the debt reduction policy has continued. The debt path of the Convergence Programme targets a debt ratio of below 65 percent of GDP by 2020. Debt reduction in coming years is expected to be underpinned by deficit figures well below 3 percent of GDP. Thanks to Government measures, the financing conditions of government debt have also improved: the share of domestic debt holders has increased, which creates a more stable investor base, while the proportion of forex debt has also fallen and thus the country’s exposure to external risks has been mitigated.

Country-specific recommendations are to be discussed at several EU forums in coming weeks, and a final version is scheduled to be adopted by the Council in June.

(Ministry for National Economy)