At present one million jobs and, consequently, places of work are missing on the Hungarian labour market. That is why the government committed itself to form a partnership with the enterprises to create them in ten years’ time. The creation of one million jobs is necessary so that our extremely low rate of employment, in comparison with the European Union, should belong to the premier league of the EU.
The size of the Hungarian national budget relative to the size of our economy is almost 6 percent bigger than that of the countries with economies at a similar stage of development or that of the average of the other Visegrád group members. Almost half of the difference is the result of the significantly higher Hungarian interest liabilities due to our bigger public debt, but our primary expenditures are also higher than those of our competitors in the region. The current structure of expenditures in the national budget is not pro-growth: the proportion of expenditures on investments is low, the proportion of running expenditures is high – especially, within this, the amount spent on social benefits.
Hungary has been committed to a strict budget policy. In accordance with the convergence programme, the government will gradually reduce budget deficit from 3.8% as of GDP in 2010 to 2.9% in 2011. Parallel to this, they will contribute to jumpstarting an economic growth with measures aimed at job creation. As a result, the level of public debt will fall from 80% as of GDP in 2010 to 70% by 2014.
The minister for national economy had proposed that a stability reserve of 250bn HUF be set up as part of the budget. This stability fund will protect Hungary from unforeseeable external economic developments without having to modify this year’s budget under any circumstances.
Despite the ongoing volatility of the international capital markets, mainly caused by renewed concerns about the worsening financial situation in some of the developed countries, the Hungarian government securities market worked well and provided smooth and stable financing for the government throughout 2010.
Since the constant aggravation of the2008 global economic crisis, it has been clear that the prioritised issue of the 2010s will definitely be that of government debt in economic terms. The crisis management measures taken by the Western states and the huge amounts spent to save the financial sector induced fast-growing indebtedness for these countries.
The so-far complicated and, in certain aspects, often lavish system of public employment is about to be replaced by the transparent and financially viable national public employment programme of the government that acknowledges value-creating work.
The 2010 budget constructed and left behind by the Socialist government is characterized by overestimated revenues, underestimated expenditures and, thus, an unrealistic deficit target. The landmines hidden in this year‟s budget have been overlooked by, among other financial organizations, the Fiscal Council. The 500bn HUF “problem” has been corrected by the extraordinary measures taken by the Government of National Issues to keep the deficit target of 3.8, which is an exceptionally low figure in the EU.
Hungary would like to contribute to the execution of the Europe 2020 Strategy with its particular national capabilities and priorities. The primary priority of the government’s economic policy is to improve employment – it also appears as Hungary’s most important commitment of the National Reform Programme, outlining the execution of the Europe 2020 Strategy.
The 500-700bn HUF extra gap in the budget left behind by the Socialist government forced the new government to urgently introduce measures aimed at increasing revenues and cutting expenditure.