The International Monetary Fund (IMF) has acknowledged Hungary’s strong economic growth and reduced external vulnerability, but urged continued fiscal consolidation in an assessment released on Thursday.
“[IMF Executive Directors] commended Hungary’s continued strong economic performance, which has led to faster income convergence towards the European Union average and reduction of vulnerabilities,” the IMF said in a press release. “However, given the increased external uncertainty and Hungary’s still high public debt and gross financing needs, Directors encouraged continued fiscal consolidation and supply-side reforms, to further build resilience and sustain the growth momentum,” the fund added.
According to MTI, the directors recommended decision-makers reduce exemptions, broaden the tax base, phase out sectorial taxes, moderately reduce spending on goods and services, contain the public wage bill and rationalize generalized subsidies.
Further steps include “close monitoring” of the housing market, adding that existing demand-stimulating incentives should be scaled down.
A table of selected economic indicators for the country attached to the release shows Hungary’s GDP growth reaching 4.9 percent this year. The IMF also projects Hungary’s economy will expand by 3.5 percent next year, above the 3.3 percent forecast in the October World Economic Outlook.