Hungarian Parliament adopts 2011 budget over opposition protests

10:50, December 24, 2010      

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Hungary's parliament adopted the country's 2011 national budget on Thursday, amid opposition protests over the sacking of the Budget Council and its reliance on temporary inflows.

The new budget was approved in a vote along the party lines, with 257 yes votes from the ruling Fidesz and 119 against from all the three opposition parties and two independents.

The new budget includes revenue that would have gone to private pension funds, had the government not suspended payments and coerced residents to return to the government -sponsored pension program. It also includes revenue from a 98 percent tax on severance pay that it introduced retroactively last autumn. When the Constitutional Court objected to the retroactive tax, the government used its two-thirds majority in parliament to clip the powers of the high court.

The new budget law puts an end to the independent watchdog, the Budget Council, and replaces it with a three-member body, two of whom are government-appointees.

National Economy Minister Gyorgy Matolcsy said the budget rested on three assumptions: that economic growth next year would be 3 percent, that inflation would be 3.5 percent, and that there would be no global economic deterioration. He also said he expected to be able to cut the national debt, currently hovering at around 80 percent of GDP, to 78 percent, while expanding consumption, investments and employment.

Matolcsy said that achieving the targets would require strict adherence to the budget, a tax reform, and structural reforms, which include job creation.

Meanwhile the opposition socialists -- MSZP -- and greens -- LMP -- announced that they would set up a shadow Budget Council and invited all political parties, economists and citizens " committed to responsible economic operations" to join. The shadow Council will do the numbers on proposals to amend the budget and monitor the extent to which the course set by the new economic measures can be sustained.

The far right Jobbik party also questioned the sustainability of the country, given that the budget inflow is relying on a number of one-off measures.

Source: Xinhua

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