At a working breakfast preceding the Ecofin’s session on Monday, EU finance ministers discussed, among others, the handling of extra fiscal expenditures related to the management of the migration crisis. Following the meeting, Minister for National Economy Mihály Varga said that during the debate it had been concluded that the legal provisions of the Stability and Growth Pact allow the flexible incorporation of migration-related expenditures into government budget deficits.

At the ECOFIN’s October session, the issue of accounting migration-related fiscal expenditures in national budgets in view of the Stability and Growth Pact has been raised, upon the initiative of Austria and Italy and the backing of Hungary. The Commission had examined the initiative and presented its legal standpoint at today’s session. The Commission has come to the conclusion that – upon the request of a member state – the Commission and the Council may take into account costs incurred in connection with migration, as these are the consequence of an unforeseeable event that is not in a Government’s power to influence, and these have a significant impact on fiscal balances but they do not jeopardize budget sustainability in the medium term.  Provided the above requirements are met, countries that are not under the excessive deficit procedure, such as Hungary, may be permitted temporary divergence from the medium-term fiscal deficit path or the concrete deficit figure.

EU member states are also seeking a formula for the financing of migration-related costs within the EU budget. This topic is scheduled to be on the agenda of ministers in charge of state budgets on 13 November, when the 2016 EU Budget is to be debated. Hungary supports the amendment to add EUR 1.4bn of extra funds to the budget, requested for covering migration-related expenditures.

Ministers also evaluated the autumn forecast of the European Commission. The report’s macro-economic estimates for Hungary are practically in line with those of the Government. The Commission is expecting economic growth of 2.9 percent in Hungary for 2015, slightly up from the 2.8 percent figure predicted in May. According to the European Commission, Hungary’s fiscal deficit will also be better than prior estimates: while in May 2.5 percent was prognosticated for 2015, the Commission’s latest projections are 2.3 percent for this year and 2.1 percent for next year.

Predictions of the Hungarian Government are increasingly confirmed by both the European Commission and other international organizations.

The finance ministers also exchanged views on the major elements of a proposal package concerning the extension of the Economic Monetary Union (EMU), presented by the Commission in October. The draft proposal contains elements such as the establishment of a European Fiscal Panel designed to evaluate the implementation of the European Union’s and the Euro-zone’s fiscal policy as well as setting up authorities to analyse competitiveness processes within member states.

As Mihály Varga pointed out, the debate on the future of the EMU must continue to be clearly structured, involve each EU member state and conform to the unity of the common market.

(Ministry for National Economy)