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Hungary's government has made great progress toward revealing the true fiscal cost of its budgetary and off-budget programs, containing the financial risks of its policies, and improving the management of public expenditures and contingent liabilities. Although far from complete, fiscal adjustment in Hungary has been successful not only in cutting the budget deficit but also in reducing less visible aspects of fiscal vulnerability.
Governments' contingent liabilities increase fiscal vulnerability, but are omitted in traditional measures of the current deficit. In the Czech Republic this omission may mean that fiscal adjustment has been overstated by 3 to 4 percent of annual GDP, with future budgets having to pay for past guarantees. The stock of existing contingent liabilities in Macedonia could add 2 to 4 percent of GDP to that country's future deficits.
This 2018 Article IV Consultation highlights that the headline inflation in Hungary has started to pick up, mainly owing to higher energy prices, while core inflation has been running sideways over the past six months, despite emerging capacity constraints. Unemployment remains on a decreasing trend, and labor shortages are intensifying despite the improvement in participation rates. The 2017 general government fiscal deficit narrowed to 2 percent of GDP, compared with the budgeted 2.4 percent. This outcome was mostly driven by strong GDP growth and reduced interest payments. The IMF staff projects the 2018 overall fiscal deficit at about 2.4 percent of GDP, in line with the budget’s target.
A multi-country study of the conditions under which decentralized countries might ensure fiscal discipline.
A number of member countries have expressed interest in advice regarding disclosure and management of fiscal risks (defined as the possibility of deviations of fiscal outcomes from what was expected at the time of the budget or other forecast). This paper analyzes the main sources of fiscal risks and—building on an overview of existing practices in a wide range of countries—provides practical suggestions in this area, including a possible Statement of Fiscal Risks and a set of Guidelines for Fiscal Risk Disclosure and Management.
Many governments have faced serious instability as a result of their contingent liabilities. But conventional public finance analysis and institutions fail to address such fiscal risks. This book aims to provide motivation and practical guidance to governments seeking to improve their management of fiscal risks. The book addresses some of the difficult analytical and institutional challenges that face reformers tooling up to manage government fiscal risks. It discusses the inadequacies of conventional practices as well as recent advances in dealing with fiscal risk.
This departmental paper investigates how countries in Central, Eastern, and Southeastern Europe (CESEE) can improve fiscal transparency, thereby raising government efficiency and reducing corruption vulnerabilities.
This 2002 edition of OECD's periodic review of Hungary's economy examines recent economic developments, policies and prospects and includes special features on public expenditure and structural policy.
Hungary was severely affected by the crisis. The financial sector has remained resilient throughout the crisis. The Central Bank (MNB) paused in mid-2010 and has tightened interest rates by 50 basis points since November in response to a sharp rise in risk premia and higher headline inflation prints. The importance of addressing financial sector vulnerabilities is discussed. Executive Directors welcomed efforts to support distressed mortgage holders, as long as moral hazard and fiscal costs are contained. A medium-term framework was implemented.