Page 24 - Central & Southeast Outlook 2020

share of GDP, according to the budget bill. While debt burden was 8.8% of GDP in 2019, it will compress slightly to 8% of GDP in 2020. In absolute sums, that means a reduction to €2.4bn in 2020, compared to €2.3bn in 2019.
The 2020 budget bill assumes an increase in pensions, the Health Insurance Funds, resarch and development, as well as defence. The latter will once again reach the Nato-proposed level of 2% of GDP at least, something that many other alliance members have struggled with. Estonia is, however, wary of meeting its Nato commitments because of its proximity to Russia, seen as a hostile country.
The budget bill also penciled in pay rises for public sector’s employees such as teachers or social workers.
The budget bill for 2020 is also the first bill with a new structure. “The previous budget [was] described in terms of expenditure [while the 2020] state budget will consist of programs led by ministers. This means that the government sets performance targets for the programs and, to achieve them, state authorities are to provide services of agreed quality, volume and cost,” Estonian newspaper ​Postimees​ reported in December.
The budget bill comes on the back of macroeconomic assumptions of GDP growth of 2.2% in 2020 and inflation easing to 2.2% as well.
3.3 ​Budget- Hungary
Parliament adopted the 2020 budget in summer 2019 in line with earlier years. ​Thanks to stronger than expected growth and higher tax proceeds the cabinet will have no problem meeting the 1.8% deficit target in 2019. The deficit could fall to a record 1% in 2020. The decline is mainly supported by a decrease in government investments.
Reserves will increase to HUF500bn (€1.5bn) to widen the manoeuvre room for any negative impacts stemming from deteriorating external market conditions. The fiscal policy will accumulate countercyclical reserves in 2020 and the following years as well, Hungary’s central bank the Magyar Nemzeti Bank (MNB) said.
Hungary has pursued a tight fiscal policy and kept the deficit below 3% since being released from the excessive budget deficit procedure in 2013 after breaching the deficit rules for nine straight years. By 2023, the government expects a balanced budget.
The government's target of fiscal consolidation to eventually eliminate the deficit over the medium term would help reduce domestic demand pressures and create fiscal space that can be used during future downturns.
24​ CESE Outlook 2020​ ​ ​www.intellinews.com