2005/348/EC: Council Decision of 18 January 2005 establishing, in accordance with Article 104(8) of the Treaty establishing the European Community, whether effective action has been taken by the Republic of Hungary in response to recommendations of the Council in accordance with Article 104(7) of that Treaty
Date: 2005-01-18
Institutions: Council of the European Union
Subjects: Hungary, budget deficit, budget policy, multilateral surveillance, public debt, stability pact

L 110/42

EN

Official Journal of the European Union

30.4.2005

COUNCIL DECISION

of 18 January 2005

establishing, in accordance with Article 104(8) of the Treaty establishing the European Community,
whether effective action has been taken by the Republic of Hungary in response to
recommendations of the Council in accordance with Article 104(7) of that Treaty

(2005/348/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
Community, and in particular Article 104(8) thereof,

establishing the European

Having regard to the recommendation from the Commission,

Whereas:

(1)

(2)

(3)

(4)

(5)

In accordance with Article 104 of the Treaty, Member
States are to avoid excessive government deficits.

as

sound

finances

a means

government

The Stability and Growth Pact is based on the objective
of
of
strengthening the conditions for price stability and for
strong sustainable growth conducive to employment
creation. The Stability
includes
Council Regulation (EC) No 1467/97 of 7 July 1997
on speeding up and clarifying the implementation of
the excessive deficit procedure (1), set out
in Article
104 of
the prompt
correction of excessive general government deficits.

in order to further

and Growth Pact

the Treaty,

The Amsterdam Resolution of the European Council on
the Stability and Growth Pact of 17 June 1997 (2)
solemnly invites all parties, namely the Member States,
the
the Council and the Commission,
Treaty and the Stability and Growth Pact
in a strict
and timely manner.

to implement

By Decision 2004/918/EC (3),
in
accordance with Article 104(6) of the Treaty, that an
excessive deficit exists in Hungary.

the Council decided,

the Treaty and
In accordance with Article 104(7) of
Article 3(4) of Regulation (EC) No 1467/97,
the
Council adopted on 5 July 2004 a recommendation to
the Hungarian authorities to bring the existence of an

(1) OJ L 209, 2.8.1997, p. 6.
(2) OJ C 236, 2.8.1997, p. 1.
(3) OJ L 389, 30.12.2004, p. 27.

take

effective

excessive deficit to an end as rapidly as possible and to
take action in a medium-term framework to achieve the
objective of bringing the deficit below 3 % of GDP by
2008 in a credible and sustainable manner, in accordance
reduction specified in the
with the path for deficit
convergence programme submitted by the Hungarian
authorities and endorsed in the Council opinion of 5
July 2004 on that programme (4). This Recommendation
established the deadline of 5 November 2004 for the
action
to
Hungarian Government
regarding the measures envisaged to achieve the 2005
deficit target of 4,1 % of GDP. In this recommendation,
the Council also recommended the Republic of Hungary
to implement with vigour the measures envisaged in the
May 2004 convergence programme, and in particular to
stand
if
ready
general
necessary, with a
government deficit target for 2004 of 4,6 % GDP.
In
invited the Hungarian authorities
addition, the Council
to seize every opportunity to accelerate fiscal adjustment;
to undertake the envisaged reforms of the public admi-
nistration, health and education systems; and to ensure
that planned tax cuts were adequately financed and make
their implementation conditional upon the achievement
of the deficit targets.

additional measures,

view to achieving

to introduce

the

(6)

(7)

In accordance with Article 4(2) of Regulation (EC) No
1467/97,
the Council, when considering whether
effective action has been taken in response to its recom-
mendations made in accordance with Article 104(7) of
the Treaty, is to base its decision on publicly announced
the Member State
decisions by the Government of
concerned.

An assessment of the publicly announced decisions taken
by the Republic of Hungary between the issuing of the
Council Recommendation in accordance with Article
104(7) of the Treaty and the deadline set in that Recom-
mendation leads to the following conclusions:

— after

of

adopted

a number

the Council

recommendation the Hungarian
Government
additional
measures. They were based on the expenditure side
and have contributed to a significant decline in the
budget deficit
in 2004 compared to 2003 and a
more favourable and sustainable reorientation of
growth. However, the action taken was not sufficient
to achieve the 2004 budget deficit target of 4,6 % of
GDP contained in the Council
recommendation,
which is expected to be missed by a sizeable margin,

(4) OJ C 320, 24.12.2004, p. 11.

30.4.2005

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Official Journal of the European Union

L 110/43

in 2005,

— a number of measures have been announced in the
2005 Budget that are aimed at further reducing the
including an ‘emergency’
budget deficit
reserve package of 0,5 % of GDP against a possible
overshooting of the 2005 target. However, they will
not be sufficient to meet the deficit target of 4,1 % of
GDP contained in the Council
recommendation,
which is also expected to be missed by a sizeable
margin,

path
In

— the measures taken so far by the Hungarian autho-
rities will not avoid a deviation from the planned
convergence
adjustment
programme.
continued
commitment of the Hungarian Government to have
the excessive deficit corrected by 2008 needs to be
underpinned by decisive measures of
further fiscal
consolidation and more determined pursuit of
structural reforms.

the May
context,

of
this

the

this recommendation public. However, in line with the
Stability and Growth Pact Resolution of the European
Council, the Republic of Hungary agreed to make the
recommendation public in July 2004,

HAS DECIDED AS FOLLOWS:

Article 1

taken effective action in
The Republic of Hungary has not
response to the Council Recommendation of 5 July 2004
within the period laid down in that Recommendation.

Article 2

This Decision is addressed to the Republic of Hungary.

Done at Brussels, 18 January 2005

(8)

Article 104(8) of the Treaty states that when the Council
establishes that
there has been no effective action in
response to its recommendation in accordance with
it may decide to make
Article 104(7) of that Treaty,

For the Council
The President

J.-C. JUNCKER