EU set to approve Hungary austerity plan
Monday, 25 September 2006The European Commission will tomorrow approve an austerity plan put forward by Hungary to slash its public deficit which has led to riots and calls for the government there to resign, according to an EU official.
Brussels will voice support for the raft of measures presented by the government of Socialist Prime Minister Ferenc Gyurcsany to bring down the public deficit from 10.1% this year to 3.2 % in 2009, as long as the measures are applied rigorously, the official said on condition of anonymity.
The austerity measures include a 2% rise in social security contributions, half of which will be paid by employees, and an increase in the minimum rate of sales tax (levied on food and basic services) from 15 to 20%.
Far-right protests continued yesterday in front of parliament in Budapest, with 8,000 people calling for Gyurcsany to quit after it was revealed September 17 that he had lied about the economy to win re-election in April.
Budapest's planned measures are also aimed at satisfying convergence measures for adopting the euro common currency, which Hungary hopes to do in 2013. Under the programme gas and electricity prices will also rise.
