After it took office in May 2010, the new government faced several unexpected challenges. Serious measures had to be undertaken to control the slippage in the 2010 budget. Without prompt fiscal adjustment, general government deficit would have increased close to 7% of GDP. The two action plans announced in the second half of last year introduced rigorous saving measures on the expenditure side (freezing of appropriations, elimination of bonuses, revision of outsourced activities, reduction of purchase of goods and services).

On the other hand, the action plans contained temporary revenue-increasing steps (temporary crisis taxes, the re-direction of private pension fund contributions to the state pension pillar from November 2010) in addition to tax measures aimed at increasing competitiveness and promoting small and medium-sized enterprises. Owing to the measures, the accrual-based deficit dropped by 50% between the first and the second half of the year and finally it was 4.2 % of GDP in 2010.

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(Ministry of National Economy)