The Economic and Financial Affairs Council of the European Union (ECOFIN) delivered its decision on 22 June to abolish the temporary suspension of commitments from the Cohesion Fund -- which verdict the Council had been passed on 13 March and which would have entered into effect from 1 January 2013. The decision could be made because the Council and the European Commission also opine that Hungary has carried out sufficient measures in order to cut the excessive deficit.

A trend reversal has been achieved: it is for the first time in the excessive deficit procedure -- that has been going on since 2004 -- that a decision was in favour of Hungary. Therefore the danger of the loss of almost half a billion euro of development funds for Hungary is averted.

In 2011 Hungary had a budget balance deficit well below the 3 percent threshold considered as excessive. Back in March 2012 the council still had the opinion that risks made it questionable whether the Hungarian budget deficit could be permanently kept below 3 percent. By now, however, the measures of the Széll Kálmán Plan could be presented in a conclusive way and in detail and they express the commitment of the government to fiscal deficit targets.

Well-established economic growth is indispensible for the permanent reduction of fiscal deficit. The measures which lay the foundations for growth, higher employment rates and the reduction of fiscal deficit the government presented in its economic policy plan called Széll Kálmán Plan 2.0 which was also sent to relevant EU institutions. The SzKT 2.0 includes the Convergence Programme and the National Reform Programme. In light of the above, the Council established the fact in its evaluation published on 30 May that due to the comprehensive economic policy programme of the government, the fiscal deficit will continue to be below 3 percent in the years ahead. This finding makes it possible that in 2013 the excessive deficit procedure which has been ongoing since 2004 can be revoked.

Parallel to delivering a decision favourable for Hungary, the Council made resolutions with regard to the assessment of the stability and convergence as well as the national reform programmes of member countries, and the measures proposed by the macroeconomic imbalances surveillance mechanism established by the new six-pack. The ruling suggests that the Council and the Commission have endorsed the Hungarian Convergence Programme and they did not consider it necessary either to commence a macroeconomic imbalance procedure against Hungary.

Besides maintaining financial and economic stability, another key priority of the government is economic growth and job creation. It is obvious that growth and high employment rate are adequate responses to the European economic crisis. To this end, the government will continue to strengthen its job creation programmes.

(Nemzetgazdasági Minisztérium)