Budapest appears to be dragging its feet on presenting a realistic picture of Hungary’s economic prospects, according to a letter from the European Commission seen by Euronews, the latest potential dispute in a pattern of worsening relations with Brussels. .
Hungary’s tax plans lack meaningful information and are based on unreliable data, European Commissioner V has saidAldis Dombrovskis in a letter to the Minister of Finance, Mihály Varga, dated Thursday, December 5 and to which ‘Euronews’ has had access.
Budapest seems to drag its feet when it comes to present economic forecasts to Brussels realistic, which is part of a growing confrontation between both parties.
Dombrovskis, European Commissioner for the Economy, has stated that “at this stage, important elements are still missing, or that require further adjustments and specifications, before the Commission can finalize its assessment” of the Hungary’s Medium-Term Fiscal Plan.
The Commission also highlights problems with the economic growth datainflation and interest expense, and states that deviations from the Commission’s own methodology must be “duly justified“.
The analysis is supposed to lay out how Viktor Orbán’s government plans to return to fiscal balance in the coming years, after restrictions were eased. strict EU spending rules in the midst of the cholera pandemic and the resulting energy crisis.
But the complete evaluation of the community Executive “may take some time… given the breadth of missing information“, which could extend the deadline from December 12 to mid-January of next year, according to the letter.
Fines for non-compliance
The EU Treaty limits the debt that its Member States can incur and, in principle, Violations may result in finesalthough such severe measures are rarely if ever imposed.
The objective of the Stability and Growth Pact is to avoid economic turbulence in the eurozone, such as those that occurred in Greece after the global financial crisis of 2008, But the rules also apply, although less strictly, to countries that do not share the currency, such as Hungary.
According to the EU’s Maastricht criteria, outstanding public debt should not exceed 60% of economic production annual, or GDP, and the budget deficit must not be greater than 3%.
These budget restrictions were largely suspended during the government wastes of the pandemic and the energy crisis surrounding the Russian invasion of Ukrainebut they have been in force again since this year.
Apparently Hungary was delayed in the presentation of its tax planso it could not be evaluated at the end of November along with most other EU Member States.
In view of internal political problems, the Commission had given five other EU members a additional deadline to submit your deficit proposals. Among them are Germany, which has called early elections for February, and Belgium, which is still trying to form a government coalition after the federal elections in June.
Only one of the remaining 21 countries received a failure for its tax plans in November. The Commission reprimanded the Netherlands, traditionally a fiscal hawk, for a deficit expected to rise from 0.2% this year to 2.4% in 2026due in part to income tax cuts and increased public investment.
Toxic impact on internal politics
Compliance with the demands of Brussels may have a toxic impact on domestic politics. French Prime Minister Michel Barnier’s government fell this week after lawmakers refused to support his seven-year plan to reduce France’s deficit, which at 6.2% is the highest in the eurozone. Hungary is also approaching the end of a difficult six months in which has chaired the debates between the Member States in the Council of the EU.
Budapest has repeatedly vetoed sanctions and other measures taken against Russia in response to the invasion of Ukraine, and has refused to apply the rulings of the EU Courts on asylum rights, which has led Brussels to suspend lucrative EU funds.
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