The market freely sets prices for most products and services. User prices for pharmaceuticals, public transport, and utilities continue to be partially set by the state. The government offers a wholesale floor price for many agricultural products. Starting in 1997, successive governments have reduced income tax rates and employer social contributions in an effort to cut inflation, spur job growth, and shrink the gray economy. Corporate tax remains low at 18 percent.
Many municipalities offer local incentives.
Major structural budget reform has been implemented and further legislation is expected in this area. The government is likely to focus on reforming health care and local government financing, in order to reduce further state expenditures. Hungarian governments have consistently met external debt service payments. A standby credit arrangement with the International Monetary Fund ended in February 1998 by mutual agreement. Hungary has prepaid all past borrowings from the IMF, and received an investment grade rating on sovereign long-term foreign currency debt from leading U.S. credit rating agencies in late 1996.