On 7-9 June, the European Commission services, in close cooperation with the International Monetary Fund staff, visited Budapest for informal discussions with the incoming government.
On 7-9 June, the European Commission services, in close cooperation with the International Monetary Fund staff, visited Budapest for informal discussions with the incoming government. They noted the authorities' commitment to the agreed fiscal target of 3.8% of GDP in 2010, and their intention to implement corrective measures as needed. The next review mission, which will formally discuss these measures and other policies under the programme in detail, is expected for early July.
“I very much welcome the authorities' commitment to fiscal targets in line with what has been recommended by the Council under the Excessive Deficit Procedure and agreed in the context of the EU balance of payments assistance, and their intention to implement the necessary corrective measures”, Commissioner Rehn said. “I am convinced that this is the best strategy to ensure that the Hungarian economy continues on a sustainable path.”
The mission reviewed the economic situation and held useful discussions on the government's policy intentions for 2010 and beyond. They welcomed the authorities' commitment to the fiscal target of 3.8% of GDP in 2010 agreed under the EU-IMF supported programme, and their intention to implement measures as needed to ensure that this target is achieved. These measures and the programme will be formally discussed in detail in the course of the next review mission, which is scheduled for early July. Further measures will need to be identified to ensure that the deficit is reduced below 3% of GDP in 2011 as committed and the Hungarian economy continues on a sustainable path.
The Commission services will continue to monitor the situation in Hungary not only in the context of the EU medium term assistance but also via its regular EU fiscal surveillance under the Stability and Growth Pact.
So far, Hungary received three instalments of the EU €6.5 billion balance of payments loan: two instalments of €2 billion each on 9 December 2008 and 26 March 2009 and a further €1.5 billion on 6 July 2009. In view of the improved access to financing, Hungary has not drawn on EU and IMF assistance upon the completion of the previous reviews in November 2009 and February 2010. The outstanding amount of EU assistance (of up to EUR 1 billion) remains available and can be disbursed if needs arise, as usual subject to policy conditionality. The EU assistance has been granted for a period of 2 years which will end on 3 November 2010.
On the Commission side, the mission was led by Matthias Mors, Acting Director at the Economic and Financial Affairs Directorate (ECFIN) and Barbara Kauffmann, Head of Unit at ECFIN for a group of countries that comprises Hungary.