Hungary Accepts Demands To Cut Deficit

Discussion in 'Economics' started by ASusilovic, Sep 10, 2010.

  1. Hungary has given in to European leaders that have pressured the nation to cut its budget deficit to below 3% of gross domestic product next year, according to Financial Times. The demands laid out by the European Union and International Monetary Fund caused markets concern when Hungary refused to agree to the terms with the groups in July, with Hungarian leaders forgoing the renewal of a joint EU-IMF support package worth €20 billion.

    The move will see Hungary operate at a deficit below 3% of GDP in 2011 and is likely to ease investor fears over the uncertainty surrounding the country’s future, despite the fact that officials announced that Hungary will still skip out on the international aid package. The agreement is subject to several conditions, however, such as a minimum of 2.5% economic growth in 2011 and the continuation of a new levy on the financial sector through next year.