Economy
EU to become "increasingly angry" with Hungary over budget gap overshoot
The Economic and Finance Committee (EFC), the body which makes preparations for meetings of EU finance ministers (Ecofin), is expected to discuss on Friday the latest developments in Hungary's deficit, said the officials, who declined to be identified.
“Then the issue goes through the normal decision-making procedure of the European Commission and some time at the end of October the EFC and the Ecofin...will make new recommendations (for cutting the deficit)," one said.
According to local press reports, Hungary's public sector deficit in 2005 could be as much as 7.2% of GDP, way in excess of the 4.7% target, due to the inclusion of motorway spending.
The EU bodies are unlikely to propose fines against the Hungary, the official said.
“They will not fall on Hungary in the first step, but they will become increasingly angry," the official said.
Hungary is already subject to the European Union's Excessive Deficit Procedure. The European Commission already warned Hungary in mid-July that achieving the public sector deficit target of 3.6% of GDP in 2005 might require further action, adding that decisive adjustments would be needed to cut it further to 2.9% in 2006.
A Commission spokeswoman said on Monday the EU executive would reassess Hungary's efforts to lower its deficit and that Eurostat had informed the government of how spending related to motorways should be accounted for in the current year.
Hungary's deficits have exceeded targets in the past years and EU Monetary Affairs Commissioner Joaquin Almunia said on 16 September that the EU newcomer would again overshoot its target.
The EU's statistical agency, Eurostat, published figures on Monday for Hungary's deficits for the years 2001 to 2005, which showed the gap was wider than thought last year.
The deficit in 2004 was 6.5% of GDP, including pension costs of 1.1%percent, compared with the government's target of 4.5%.
Hungary would have to reduce its public sector deficit to about 3% of GDP by 2008 if it wants to keep to its plan to join the euro zone in 2010.
“Then the issue goes through the normal decision-making procedure of the European Commission and some time at the end of October the EFC and the Ecofin...will make new recommendations (for cutting the deficit)," one said.
According to local press reports, Hungary's public sector deficit in 2005 could be as much as 7.2% of GDP, way in excess of the 4.7% target, due to the inclusion of motorway spending.
The EU bodies are unlikely to propose fines against the Hungary, the official said.
“They will not fall on Hungary in the first step, but they will become increasingly angry," the official said.
Hungary is already subject to the European Union's Excessive Deficit Procedure. The European Commission already warned Hungary in mid-July that achieving the public sector deficit target of 3.6% of GDP in 2005 might require further action, adding that decisive adjustments would be needed to cut it further to 2.9% in 2006.
A Commission spokeswoman said on Monday the EU executive would reassess Hungary's efforts to lower its deficit and that Eurostat had informed the government of how spending related to motorways should be accounted for in the current year.
Hungary's deficits have exceeded targets in the past years and EU Monetary Affairs Commissioner Joaquin Almunia said on 16 September that the EU newcomer would again overshoot its target.
The EU's statistical agency, Eurostat, published figures on Monday for Hungary's deficits for the years 2001 to 2005, which showed the gap was wider than thought last year.
The deficit in 2004 was 6.5% of GDP, including pension costs of 1.1%percent, compared with the government's target of 4.5%.
Hungary would have to reduce its public sector deficit to about 3% of GDP by 2008 if it wants to keep to its plan to join the euro zone in 2010.
