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Hungary Could Face Third Excessive Deficit Procedure in Ten Years


The European Commission has decided that an excessive deficit procedure is warranted for Hungary and six other EU member states, based on their 2023 deficit figures and forecasts, reports Portfolio.

This decision follows an analysis issued on June 19, which concluded that opening excessive deficit procedures was justified due to the budgetary situations and outlooks of these countries. The Commission’s decision, supported by the Economic and Financial Committee’s opinion, has led to a formal proposal for a Council decision.

Cumulative balance of the government sector. Picture: ksh.hu

Specifically, Hungary’s 2022 general government deficit was 6.7% of GDP, and its debt ratio was 73.5%, both exceeding the reference values of 3% and 60%, respectively.

Fact

The European Commission initiates an excessive deficit procedure when a member state of the European Union fails to meet the fiscal criteria set out in the Stability and Growth Pact (SGP). This typically involves a deficit-to-GDP ratio exceeding 3% or a debt-to-GDP ratio exceeding 60% without a credible plan for correction.

The Commission’s forecasts for 2024 and 2025 also predict deficits well above 3%. Despite the Hungarian government’s deficit target of 4.5% for 2023 and announced corrective measures, the Commission’s spring forecast predicted a 5.4% deficit.

The next step involves presenting the proposed decisions to the Council, making it almost certain that the excessive deficit procedure will be opened for all seven member states: Hungary, Belgium, France, Italy, Malta, Poland, and Slovakia. By September, each country will receive a multi-year individual adjustment path that accounts for specific circumstances. As Hungary Today earlier reported, the European Commission have urged to start this procedure in June.

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Via Portfolio; Featured Image: Pixabay





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