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Hungarian parliament agrees to EU fiscal pact

(Xinhua)

15:58, February 21, 2012

BUDAPEST, Feb. 20 (Xinhua) -- The Hungarian parliament voted on Monday to approve Hungary's support to the new European Union (EU) fiscal pact aiming to impose tougher fiscal discipline.

The final version of the pact, the details of which were ironed out in January at a summit of national leaders, is expected to be signed in the first days of March at a meeting of the European Council.

Hungary shocked the media world back in December when Prime Minister Viktor Orban opted out of the pact the first time the EU discussed it, only to backtrack within hours, when he said he was only calling for parliamentary approval.

Given the government's two-thirds majority in parliament and the certainty of a party-line vote, the statement had the overtones of retreat, possibly because of Hungary's dire need for a line of credit from the EU and the International Monetary Fund that the latter have been reluctant to give the country.

Last week Orban said the December version had been a rough draft that lacked specifics. He had been holding out for a version that was only mandatory for eurozone members and one that did not call for the coordination of tax laws, he said.

Under the new pact the Eurozone members agree to keep their structural deficits to a maximum of 0.5 percent of their gross domestic products unless their national debt ratios are less than 60 percent of their GDPs, in which case their deficits would be permitted to go up to 1 percent of GDP.

The pact also calls for automatic mechanisms to go into action in each country to keep their deficits in line and for member countries to include references to putting brakes on their budgets in their constitutions or other legislation. The European Union would be authorized to monitor adherence under the current version.

Hungary is not a Eurozone member.

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