In order to ensure the 2.9 percent budget deficit target for the year, the Government has decided to cut state spending by some HUF 110bn. The central government lowers its own costs to ensure that the deficit is kept at the desired level. The proposed measures will not affect families, private households, enterprises or local governments.
Savings measures became necessary to safeguard sufficient resources for key Government programmes, such as employment-boosting schemes. In comparison to the estimate in this year’s budget, the Government aims to provide public work employment for more people than it was previously planned, and thus offer wages instead of social benefits. This step will increase state budget expenditures by HUF 47bn.
Another reason for introducing safeguard measures at various ministries is that low inflation – which is an highly favourable economic indicator for the real economy and households – is expected to result in lower than formerly estimated tax revenues. On the other hand, rebounding consumption and improved economic transparency will partly offset this effect. Safeguard measures are also necessary, as -- in order to fully utilize EU development resources -- some investment projects will be completed through domestic instead of EU funding. The EU resources thus preserved will be disbursed for other investment projects.
Savings measures will have a significant impact on the expenditures of the Investment Fund within which certain projects or project elements will be put off to 2015. The amount frozen within the chapters of ministries totals HUF 39.5bn and the reserves for extraordinary government measures will also be lowered significantly. Expenditures at Extra Budgetary State Funds and those related to state asset management will also be capped by the Government.
Transitory safeguard measures do not require regulatory amendments, but they underpin fiscal stability, ensure the decrease of state debt and the attainment of the announced deficit target. This year’s reserves target remains unchanged and – depending on the fiscal manoeuvring room –the Government will decide on the resources thus preserved.
(Ministry for National Economy)
