Hungary’s Reform Programme

Just a bit of background info to accompany Doug’s post on AFOE:

“Everybody in Hungary knows that real income will decrease in the next two years … and very significant social groups will feel their interests hurt. If this simple rejection is transformed and mixed with national radicalism and social populism, then this is a dangerous thing,” Gyurcsany (Ferenc Gyurcsany, Hungary’s Prime Minister) said.

He has said that Hungary aims to meet eurozone criteria on the public deficit, national debt and inflation by 2009 and adopt the common currency by 2013.Last week, Hungary submitted to the European Commission a revised plan to prepare for adoption of the euro. Under the plan, the public deficit would be slashed from 10.1 percent of gross domestic product GDP) this year, the highest in the EU, to 3.2 percent in 2009. Although it is an ambitious programme, some analysts have called on the government to cut spending further in social areas such as pensions, in order to tidy up the country’s shaky finances, a recipe Gyurcsany has so far rejected.

The so-called euro convergence programme, not deemed aggressive enough for some, has also sparked protests in Hungary and led to a huge drop in the government’s popularity. The reforms include ending free public university education and overhauling the state-run healthcare system that is teetering on the edge of bankruptcy, by introducing co-payments for visits to the doctor and to the hospital, among other things. The aim of the plan is to put a greater financial burden on citizens and curtail the welfare state, which is becoming increasingly hard to finance in a society that, like much of Europe, is growing older.

This information also has some relevance to the debate which is raging on this thread about reform.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

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