Unsustainable plans – 2012 might sweep Orbán?
Thursday, 03 November 2011 16:17
In his speech opening the debate of the 2012 budget, György Matolcsy, minister of national economy stated that the budget was stable, predictable and task-oriented. Summarizing the opinion of the State Audit Office of Hungary, László Domokos, president of the organization expressed that the 2012 budget held a certain savings potential, but he also admitted that it was not based on firm background calculations. During the debate the Hungarian Socialist Party considered the budget as an instrument of impoverishment, while Jobbik criticized its austerity nature.
In the 2012 state budget the planned budget deficit amounts to HUF 576.54 billion, with HUF 13,950.63 billion in revenues, and HUF 14,527.17 billion of expenses. The proposal calculates with 4.2 % inflation and 2.5% annual deficit. Next year – according to the government’s estimate – the gross domestic product will reach HUF 29,111 billion at current prices.
Considering next year’s draft budget and the planned new tax regulations, the Széll Kálmán Plan is likely to fail because more than a HUF 1,000 billion of fiscal adjustment is needed, stated Máté Gyömöre, analyst of the Hungarian Progressive Institute. According to Gyömöre, the government might face with two serious political problems in the near future. First it should overwrite its former promises (tax increase instead of tax cuts), and take measures that negatively effect the voter’s financial position (27% VAT). In case of early retirement, the situation is not so evident because the government could build on the general opinion that young and healthy policemen and firemen should not retire at the age of 40.