With the Széll Kálmán Plan 2.0 Hungary has complied with the requirements of the Council of the European Union, and the excessive deficit procedure related to the country can be resolved after years of failure to meet targets up until last year’s success.

The Hungarian government has adopted the programme entitled “Next Step: Széll Kálmán Plan 2.0”, which includes the Convergence Programme and the National Reform Programme sent to Brussels earlier today.

With the Széll Kálmán Plan, the Government has launched a comprehensive structural reform programme in 2011 which has enabled it to carry out a successful monetary and fiscal consolidation over the past year.The fiscal trend change has already been achieved and the Government has balanced the budget in a way which makes it sustainable in the long term.

As a consequence of the first and second Széll Kálmán Plans, the deficit targets of 2.5 per cent of GDP for 2012 and 2.2 percent of GDP for 2013 can be safely attained, and as a result central government debt will continue to decline. This programme is proof that the Government can secure the stability of the state budget, even under unfavourable economic circumstances, and can boost growth.

In 2012 the first Széll Kálmán Plan aimed for a fiscal adjustment of HUF 550bn, 83.4 per cent of which was achieved. The measures in the Széll Kálmán Plan 2.0 target additional fiscal adjustments totalling HUF 150bn in 2012. Seventy-three per cent of the objectives of the first Széll Kálmán Plan – as a consequence of government measures – will be met by 2013, whereas in 2013 the Government will further improve the situation of the state budget by about HUF 600bn ( HUF 567-665bn) through the Széll Kálmán Plan 2.0. Consequently, Hungary is carrying out a structural adjustment programme totalling two per cent of GDP in 2012 and four per cent of GDP in 2013.

In order to fulfil a prior promise, the Government will phase out crisis taxes in 2013 and the bank tax will be halved, in accordance with an agreement concluded with the Hungarian Banking Association. With the Széll Kálmán Plan 2.0 the Government is finalising transition to a tax system which enables reduction of taxes on labour by increasing taxes on consumption and sales. This will be a minor burden on individuals but will contribute significantly to the budget as a whole. The new tax measures are structural, and thus they will enable the Government to create sustainable stability on the revenue side of the budget.

The Széll Kálmán Plan 2.0 also includes the National Reform Programme of Hungary for 2012. The National Reform Programme introduces measures which aim to achieve the objectives of the Europe 2020 Strategy in the fields of labour market policy, research-development-innovation, climate policy and energy efficiency, education and social inclusion.

Next Step: Széll Kálmán Plan 2.0 is available in Hungarian and related texts (Convergence Programme and the National Reform Programme) are available in English on the right side of the page, in the attached document.

(Ministry for National Economy)