Prime Minister Viktor Orban, who shocked markets when he broke ties with the International Monetary Fund last year to pursue an anti-austerity agenda, said his main focus would be on creating jobs and cutting debt.
“There is no other solution but to face the threat. We must know that we can avoid neither the crisis, nor debt,” Orban said in his annual speech assessing the state of the economy.
“We must and we will defeat state debt, which is the main source of our troubles today. If we do not wrestle it down, it is going to wrestle us down for good.”
Orban’s government is working on a 600-650bn forint ($3bn to $3.3bn) plan to stabilise the budget beyond 2012 when “crisis” taxes worth 1.3% of gross domestic product are due to expire.
Expectations for reform and improved market sentiment have boosted the Hungarian forint to its strongest levels in nine months, below 268 per euro, and sharply reduced the cost of insuring Hungary’s debt against a default.
Orban’s remarks revealed no new details about the planned reforms, which he had said would affect spending on pensions, unemployment benefits, drug subsidies and the public transport system.
The measures are needed to make long-term cuts in Hungary’s public debt - rated on the brink of “junk” status by Fitch, Moody’s and Standard & Poor’s - after a one-off decline this year due to changes in the pension system.
“It makes no sense to entertain illusions. Everybody knows that things cannot go on like this any longer,” Orban said.
“For us to defeat debt, everybody who is able to work must work. Without this, we cannot defeat either the crisis, or debt,” Orban said, adding that “sustained benefits” were not the solution for those out of a job but able to work.
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