Veres said that the deficit is seen narrowing next year, as budget revenues will rise by 4.7%, in line with expected GDP growth of around 4%, while expenditures will increase by just 2.3%.
Next year, the GFS deficit is seen rising to HUF 1,580 bln, as the government has decided against carrying out a one-off move that would have improved the cash-flow balance by HUF 415 bln (which Veres did not elaborate on), and due to the budget assuming some HUF 170 bln of debt by national motorway agency NA.
Despite the huge correction in this year's and next year's budget deficit target, Veres said that the country's target of adopting the euro in 2010 is still attainable, although it should be weighed carefully whether it is better to make the necessary adjustments, or rather delay the date by a few years.
The draft 2006 budget calculates with household consumption expanding by 3.5% next year, while investment volume will rise by 6-8%. The trade deficit is seen mostly unchanged at ca. EUR 3.5 bln, with both exports and imports rising 10-12%. Real wages are expected to rise by 3-4% next year.
Investments as a percentage of GDP will rise from 23% to 24%, while inflation is seen slowing to near 2%. As a result of various tax cuts, budget revenues from taxes will drop from 38% to 36.3% of GDP, while at the same time, operating costs of state institutions will decrease from 7.0% to 6.7% of GDP. Veres said that savings of some HUF 300 bln will be made at state institutions next year, with operating costs of ministries to be reduced by 10%, and funds earmarked for investments to be cut by 20%.
NAPI Online