Hungary Confident on Budget Plans

„All three major rating agencies downgraded Hungary last year—leaving the country's sovereign debt ratings one notch above junk-bond status—and voiced concerns that Hungary was relying too much on special crisis taxes to shore up state finances, instead of trimming spending.

The European Union and International Monetary Fund, which saved Hungary from insolvency with a massive bailout loan in 2008, have also chided Budapest for focusing on short-term measures rather than more-enduring cuts.

In the wake of that criticism, Hungary now says it will curb social spending, reduce unemployment benefits, limit drug subsidies and take other steps that could be painful for many ordinary Hungarians.

But the government is preparing to face interest groups that will be negatively affected. »The government is ready to address upcoming challenges because this would lead to a fairer state of affairs for the majority of the people, in particular for those legally employed,« Mr. Karman [state secretary in the Economy Ministry] said.

The result, the government says, will be a budget deficit below 3% of gross domestic product this year, followed by deficits of 2.5% in 2012 and 2.2% in 2013. Public debt is also expected to fall sharply.”