Europese Commissie beoordeelt convergentieprogramma's van Malta en Hongarije (en)

Malta presented a Convergence Programme [1] which expects a correction of the deficit to well below 3% in 2006 and a progression towards balance as well as a debt below 60% of GDP in 2009. The budgetary outcomes after 2007 depend, however, on growth expectations that are on the optimistic side. In this context, Malta is invited to spell out its budgetary expenditure control strategy and progress further on the road of healthcare reform. The programme submitted by Hungary at the beginning of December reflects the strategy already examined by the Commission at the end of September 2006, and endorsed by the Council, which aims to reduce the deficit from an expected 10% in 2006 to 2.7% in 2010. To achieve this correction, Hungary must, obviously, implement rigorously the 2007 budget, curb expenditure including of the public administration and healthcare systems, generally improve budgetary control and stand ready to take further action if necessary.

"Malta comes from a long way since its deficit was 10% only four years ago. After the correction in 2006, which we expect to see confirmed soon, the challenge is to continue on a virtuous path and reduce the deficit and the debt to more sustainable levels. Hungary has yet to travel the full length of the road. But I hope that in a year's time, the Hungarian people will be able to look back with confidence that a big step in the right direction has already been taken" said Economic and Monetary Affairs Commissioner Joaquín Almunia i .

MALTA

Malta submitted a new update of its convergence programme on 7 December 2006, covering the period 2006-2009. The update aims at correcting the excessive deficit by 2006 and further improving its public finances thereafter. The MTO for the budgetary position is a balanced position in structural terms, which is to be reached only after 2009. The structural deficit is expected to improve gradually over the programme period, and the pace of adjustment is broadly in line with the Pact after the correction of the excessive deficit. There are, however, risks of worse-than-targeted budgetary outcomes after 2007 due to the markedly favourable macroeconomic scenario underlying the update's projections. Malta appears to be at medium risk as regards the long-term sustainability of public finances.

Overall, the programme seems consistent with a correction of the excessive deficit by 2006 and the debt ratio seems to be diminishing at a satisfactory pace towards 60% of GDP. Maintaining a budgetary position that is robust to offset possible growth reversals is important especially in light of the recent build-up of external imbalances.

Therefore, the Council should invite Malta to: (i) pursue adequate progress towards the MTO and ensure that the debt-to-GDP ratio is reduced accordingly, while spelling out the budgetary strategy, especially on the expenditure side, with a longer time perspective; and (ii) in view of the level of debt and the projected increase in age-related expenditure, improve the long-term sustainability of public finances by achieving the MTO and making further progress in the design and implementation of the healthcare reform.

HUNGARY

Hungary submitted a new update of its convergence programme on 1 December 2006, covering the period 2006-2010. The programme aims at correcting the excessive deficit by 2009. The deficit would be reduced from 10.1% of GDP in 2006 to 2.7% of GDP in 2010 mainly through expenditure cuts. The budgetary targets are unchanged compared to the September 2006 update of the programme. Hungary has set itself a medium-term objective ( MTO) for its public finances of a a structural deficit of 0.5% of GDP, which would be reached only after 2010. In order to reduce the high deficit through a frontloaded adjustment effort, a number of revenue-increasing and expenditure-containing measures have been taken since the summer of 2006, including. reform steps in the fields of public administration, health care, pension and education systems. Risks to the achievement of the budgetary targets, especially from 2008 relate to the uncertainty about the effective enforcement of the expenditure freezes and possible delays in the further implementation of the necessary structural reforms.

Overall, the programme is broadly consistent with correcting the excessive deficit by 2009, the deadline set by the Council. Positive factors include concrete measures to achieve the consolidation. The planned correction of the excessive deficit hinges, however, on a rigorous implementation of the programme and, in particular, on the further specification and implementation of the announced structural reform steps.

In the light of the recommendation under Article 104(7) of 10 October 2006, the Council should invite Hungary to: (i) rigorously implement the 2007 budget and take adequate action to ensure the correction of the excessive deficit by 2009, if necessary through additional measures; and ensure that the gross debt-to-GDP ratio is brought onto a firm downward trajectory, preferably before 2009; (ii) improve budgetary control by enhancing fiscal rules and by strengthening the institutional framework of public finances, building on the first steps undertaken in the budget for 2007; (iii) curb expenditure in a permanent manner through the adoption and swift implementation of the announced streamlining of the public administration and healthcare systems and the envisaged reform of the education system; and (iv) in view of the level of debt and the increase in age-related expenditure, improve the long-term sustainability of public finances by making adequate progress towards the MTO and taking additional pension reform measures as announced.

The Commission recommendations for Council Opinions are available at: http://ec.europa.eu/economy_finance/about/activities/sgp/country/doctype/cr_en.htm

MALTA

Comparison of key macroeconomic and budgetary projections

HUNGARY

Comparison of key macroeconomic and budgetary projections

[1] According to Council Regulation (EC) No 1466/97 on the strengthening of budgetary surveillance and the surveillance and coordination of economic policies (as amended by Regulation No 1055/2005), Member States must submit updated macroeconomic and budgetary projections every year. Such updates are called stability programmes in the case of countries that have adopted the euro, and convergence programmes in the case of those that have not yet done so. This regulation is also referred to as the 'preventive arm' of the Stability and Growth Pact.