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Hungary : Next years budget serves wage increases and economic growth.

According to the Minister heading the Prime Ministers Office, the 2019 budget adopted by Parliament last week serves wage increases and economic growth, and also contains tax reductions. At his press conference held on Tuesday in Budapest, Gergely Gulyas said that safe growth is the key to the countrys long-term success. The goal is for the Visegrd region to grow twice as fast as the EU average. This goal is served by the 2019 budget, too, which is a budget of safe growth, he stated.

He added that the budget rests on stable foundations, but there are international risks, and therefore the reserve amounting to some HUF 360 billion is higher than ever before. The government will only use these reserve funds for development purposes next year if they conclude that the countrys fiscal balance is guaranteed and international risks do not exert a negative impact, he laid down. Among these risks he listed the general indebtedness of countries of the Eurozone, the intensifying trade conflict with the United States, and the war and security situation in Ukraine.

Mr Gulyas informed the press that next year the social contribution tax will be reduced from 19.5 per cent to 17.5 per cent, while the tax benefits of families with two children will increase from HUF 10,000 to HUF 20,000 per child. He highlighted that today in Hungary the average pre-tax wage amounts to HUF 327,000. He added that in 2010 the average wage was HUF 202,000, meaning that in eight years it has increased by 65 per cent which he believes is a fine achievement.

In summary he said that in the long run they would like Hungarys fiscal policy to be characterised by a balanced, stable and conservative budget and compliance with the Maastricht criteria. In answer to the question as to whether Parliament will deal with the regulation of the cafeteria benefit system in the autumn, the Minister said that the government regards the new regulations regarding the cafeteria system adopted last week as final.

He also said that as of 1 January 2019 the pay of civil servants will increase. Primarily the pay of the central personnel of ministries will increase, he continued, but it is to be hoped that this pay rise scheme could be extended to a wider range of workers. He stressed that at this point in time there are only plans, the government has not yet decided. In his view, at present everyone is looking for statutory loopholes in order to be able to hire adequate work force, but this is not a good solution. He added that the right solution would be if managers were given more freedom in determining the salaries of staff members, and therefore they should change over to a system of pay pool management. According to plans, the available pay pool may increase by as much as 20 per cent, he observed. In answer to a question concerning performance evaluation, Mr Gulys said they have yet to determine whether they will introduce such a feature because it is very difficult to implement.

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Publication:Mena Report
Geographic Code:4EXHU
Date:Jul 25, 2018
Words:532
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