Publication: Magyar Közlöny
Issue: MK-2009-86 (Year: 2009, Number: 86)
Era: 2004-2010
Section: 2007. évi CVI. törvény módosításáról*
Paragraph Index: 20

11. All notices in relation with the present Supplemental Memorandum shall validly be given if in writing and sent to: For the Eu ro pe an Com mu nity Com mis si on of the Eu ro pe an Com mu ni ti es Di rec to ra te Ge ne ral for Eco no mic and Fi nan ci al Af fa irs B-1049 Brus sels Fax No.: (+32-2) 296.48.85 For the Mi nist ry of Fi nan ce of Hun ga ry Mi nist ry of Fi nan ce of Hun ga ry Jó zsef ná dor tér 2–4, H-1051 Bu da pest Fax No.: (+36 1) 327 27 51 For the Na ti o nal Bank of Hun ga ry Na ti o nal Bank of Hun ga ry Sza bad ság tér 8–9, H-1054 Bu da pest Fax No.: (+36 1) 428 25 23 2009/86. szám Done in Brussels 11/06/2009 and Budapest on 10/6/2009 in four originals in the English language. Re pub lic of Hun ga ry Eu ro pe an Com mu nity Rep re sen ted by Rep re sen ted by Eu ro pe an Com mis si on Pé ter Osz kó Jo a qu ín Al mu nia Mi nis ter of Fi nan ce Mem ber of the Eu ro pe an Com mis si on National Bank of Hungary Rep re sen ted by And rás Si mor Go ver nor of the Na ti o nal Bank of Hun ga ry ANNEX I SPECIFIC ECONOMIC POLICY CRITERIA At the time of the Commission staff review that will precede the decision on the disbursement of each instalment, the Hungarian authorities are committed to have accomplished progress in fiscal consolidation and expenditure control, fiscal governance reform, achievement of price stability, banking sector stability, financial sector regulation and supervision reforms, as well as structural reforms. In view of the significant further deterioration in the economic outlook for 2009 in the context of the global financial crisis, the 2009 European System of National and Regional Accounts in the Community (ESA) deficit target of 2.9% of GDP referred to in the Supplemental Memorandum of Understanding of March 2009 as far as the conditions for the release of the fourth instalment of the Community assistance is concerned, shall be replaced by a new target of 3.9% of GDP. The corresponding cash-flow deficit target for the central government subsector is 3.8% of GDP. Thus progress shall be monitored against this basis and reviewed before the release of the fourth instalment. Furthermore, the specific economic policy criteria spelled out in the Memorandum of Understanding as well as in the first Supplemental Memorandum of Understanding shall be augmented by the following actions: Fourth instalment A: Fiscal consolidation Regarding 2009: * Full implementation of the additional expenditure reducing package of 0.6% of GDP for 2009 announced in Spring. Following the Parliament decision of 11 May 2009 on the pension reform steps (including the abolition of the second part of the 13th month pension) and a reduction in sick pay with a combined savings of 0.35% of GDP, the remaining deficit-reducing measures notably include: (i) halving the second part of the public sector wage compensation; and (ii) fully abolishing the universal housing subsidy scheme as well as the interest subsidy schemes for all new home purchases as of 1 July 2009. * Allocation of better-than-expected (windfall) revenues to further deficit reduction, in case cyclical conditions would lead to net gains for the budget. Regarding 2010: * Abolishment of the 13th month salary in the public sector from 2010 onwards, thereby making permanent the temporary suspension of the payment of the 13th month salary in 2009, and a nominal freeze of the total public wage bill for 2010. * Adoption of measures to underpin the planned durable savings of HUF 40 bn from the budgetary appropriations for public transport (mainly targeting transfer to the railway company). * Full incorporation of the planned budgetary measures in the 2010 budget to ensure the achievement of a declining deficit path from 2009 to 2010 (in line with the transitory numerical rule set in the Fiscal Responsibility Law of November 2008) and a 2010 deficit target that does not exceed 3.8% of GDP. B: Fiscal governance * Carrying out by end September a review of the budget preparation as well as budgetary control and monitoring procedures against the background of the new Fiscal Responsibility Law, in consultation with the Fiscal Council and the relevant Parliamentary committees, identifying possible improvements. C: Financial sector regulation and supervision * Make further progress in the area of financial sector regulation and supervision. In particular, (i) complete the approval by the Parliament of the bill amending the Hungarian deposit guarantee scheme (containing the transposition of the provisions set out in Directive 2009/14/EC of the European Parliament and of the Council of 11 March 2009 amending Directive 94/19/EC on deposit-guarantee schemes as regards the coverage level and the payout delay), and (ii) amend the Financial Stability Act to ensure that it is clear that the auditor under par. 16(3) of the Financial Stability Act is different from the auditor under Act CXII of 1996 on Credits Institutions. * To ensure compliance of measures adopted in support of the financial sector with agreed EU principles and the guidance provided by the EU competition authorities (European Commission), timely inform the Commission in due form of such measures. 2009/86. szám D: Structural reforms In line with the programme of the new Government published on 21 April: * Adoption by Parliament of draft laws to further improve the financial sustainability of the social support system, including (i) reduction in the eligible age of family allowance from 23 years to 20 years; (ii) limiting the length of the cash support system for parenthood to a maximum of two years; * Adoption by Government of appropriate decrees to further streamline social support schemes, including (i) further tightening in the gas- and district heating subsidy scheme in 2010; and (ii) increasing the share of households in paying for the costs of school meal. * Adoption of decisions by the Government and amendment of relevant laws by Parliament to underpin the foreseen reduction in local government¨s expenditure of HUF 120 bn. * Adoption of revenue-neutral tax reforms aimed at reducing the tax wedge on labour and bolstering potential growth, including (i) lowering social security contributions and cutting the personal income tax by increasing the tax brackets, as well as (ii) the increase in consumption and wealth related taxes. ANNEX II MONITORING AND REPORTING SYSTEM During the implementation of the Community assistance, the following indicators and reports shall be made available to the Commission by the relevant authorities on a monthly basis (in addition to the requested reporting on (1) fiscal developments; (2) financial sector developments; and (3) inflation and foreign exchange reserves as set out in the original Memorandum of Understanding of November 2008):

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