The European Commission also believes that the Hungarian Government is more and more credible, Minister for National Economy Mihály Varga said at a press conference held jointly with European Commissioner for the Euro and Social Dialogue and EC Vice President Valdis Dombrovskis.

The Minister said that although there may still be disputed issues between the European Commission and the Hungarian Government, these include topics such as the rate of Hungarian economic growth this year: while the Government forecasts 3.1 percent of GDP, the Commission expects 2.8 percent.

Recommendations of the European Commission for Hungary have been more and more favourable, which signals that the Hungarian Government has been gaining recognition in Brussels, the Minister pointed out. “We have come a long way since the era of Socialist governments when Brussels had to warn the Hungarian government that false data had been submitted,” Mihály Varga remarked.

The European Commission formulated five recommendations for Hungary in its latest paper published in the middle of May of which the two politicians held negotiations. At the meetings, the Minister said one of the disputed issues was the public work scheme. In the opinion of the Hungarian partner, it is a successful “workfare instead of welfare” programme, as 13 percent of participants have managed to return to the labour market.

Standpoints also differ, he added, with regard to the taxation system. The Government has made it clear that there are no plans to change the proportionate, flat-rate personal income tax system, because it has fulfilled prior expectations, contributed to economic growth and helped improve employment.

Valdis Dombrovskis stressed, the Hungarian economy shows impressive growth: last year’s GDP growth of 3.6 percent was the second best figure within the EU. However, the estimate of the Government for this year is more optimistic than that of the Commission, he pointed out.

They also discussed whether some adjustments are necessary in this year’s and next year’s budget. The European Commission believes that in order to meet the fiscal deficit target, in 2015 and 2016 adjustments of 0.5 percent and 0.6 percent of GDP, respectively, will be required.

Several other factors influencing Hungary’s competitiveness have also been discussed, he said. Among these the Commissioner mentioned that in Hungary – similarly to several other EU member states -- bank lending must be normalized. He added that a number of factors are impeding this process, such as the bank tax and the high share of non-performing loans. The Commission is also encouraging the Government to sell out as soon as possible the ownership rights it has obtained in retail banks.

(Ministry for National Economy)