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Gov't prepares for Ft 350 bln budget consolidation

The government is preparing measures which will reduce the general government deficit by Ft 300 billion-Ft 350 billion, national daily Népszabadság reported on Wednesday, citing unnamed sources.

The measures will include increasing preferential VAT and simplified business tax (EVA) rates, cutting ministry budgets, freezing public sector wage scales and reducing drug subsidies, the paper said. On the revenue side, about Ft 150 billion of the correction would come from raising the 15% preferential VAT rate to 20%, in line with the main VAT rate. Raising the EVA rate from 15% to 20% would bring in additional budget revenue of Ft 30 billion. On the expenditure side, cutting ministries' budgets and freezing public sector wages would save Ft 130 billion. A cut in drug subsidies would save a further Ft 70 billion, Népszabadság wrote.

The lower estimate would well serve the market and the EU, but in order to meet the deficit target - especially if motorway construction projects are not to be funded off-budget - a reduction of Ft 500 billion would be necessary, market sources told Népszabadság.


(BBJ 08.v.06)

 
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