(8)

Based on data provided by the Commission (Eurostat), in accordance with Article 14 of Regulation (EC) No 479/2009, following the notification by Hungary before 1 April 2013, the Commission services 2013 spring forecast and the assessment of additional corrective measures adopted on 13 May 2013 in a Government decree, the following conclusions are justified: — In 2012, on the basis of a considerable fiscal effort, the general government deficit reached 1,9 % of GDP. This was also due to one-off revenues amounting to ¾ % of GDP, including the higher than budgeted one-off revenues of 0,2 % of GDP related to further transfer of assets from the private to the public pension pillar. The adopted 2012 budget targeted a deficit of 2,5 % of GDP on the basis of a 0,5 % growth. The budget contained an extraordinary reserve of 1,1 % of GDP and numerous consolidation measures, in particular: (i) revenue-increasing measures of around 1¾ % of GDP, including hikes in indirect taxes and social security contributions; (ii) structural measures on the expenditure side of ¾ % of GDP, such as a review of social benefits; and (iii) expenditure constraints of ¼ % of GDP in the public sector, including a nominal wage freeze in most sectors. In order to counterbalance the constantly deteriorating growth outlook, the Government adopted two main additional corrective packages in April and October 2012 (totalling 0,7 % of GDP), comprising mainly further cuts in the appropriations of the budgetary institutions, of which around half was implemented. In addition, the balance of the local government sector improved by around 0,7 % of GDP compared to the budgeted plans, mainly due to their low investment activity. In the context of the October 2012 Excessive Deficit Procedure Progress Report, the official 2012 deficit target was revised upwards from 2,5 % to 2,7 % of GDP. Overall, effectively implemented corrective measures of around 3 % of GDP adopted by the central government and the improvement of the local government sector's balance eventually resulted in a deficit of 1,9 % of GDP, namely, an overachievement of the original deficit target by 0,6 % of GDP. The activation of the budgeted extraordinary reserves counterbalanced the budgetary slippages, partly related to the worse than earlier expected macroeconomic environment. — The Convergence Programme for 2012 to 2016 projects the general government deficit to stay at 2,7 % of GDP in both 2013 and 2014. However, the Commission services 2013 spring forecast foresees a deficit of 3,0 % of GDP in 2013 and 3,3 % of GDP in 2014, which suggests that the excessive deficit has not been brought to an end in a durable way. On 13 May 2013, following the release of the Commission services 2013 spring forecast, the Government adopted further corrective measures amounting in gross terms to about 0,3 % and 0,7 % of GDP for 2013 and 2014, respectively. The Commission services updated fiscal assessment, which takes into account the net deficit improving effect of these additional corrective measures, projects a deficit of 2,7 % of GDP and 2,9 % of GDP in 2013 and 2014, respectively. Thus, the deficit is expected to remain below the 3 % GDP Treaty reference value over the Commission services 2013 spring forecast horizon. In addition, according to the Commission services estimation, the cyclically-adjusted budget balance, net of one-off and other temporary measures, will stand at – ¾ % and – 1½ % of GDP in 2013 and 2014, respectively, and hence will be consistent with the Hungarian medium-term budgetary objective of – 1,7 % of GDP. — The debt-to-GDP ratio was reduced from a peak of close to 82 % in 2010 to 79,2 % in 2012, thanks to substantial one-off capital transfers linked to the abolition of the mandatory private pension pillar and a number of consolidation measures. According to the Convergence Programme, the debt-to-GDP ratio will continue to decline, falling to 78,1 % and 77,2 % in 2013 and 2014, respectively, and remaining on a downward path thereafter. Even after incorporating the impact of the new corrective measurres adopted on 13 May 2013, the Commission forecasts a higher trajectory for the debt-to-GDP ratio by around 1 percentage point for both 2013 and 2014.