Fiscal Risks and the Quality of Fiscal Adjustment in Hungary

East n. 25/2009 pp. 18-22

Polgári szemle, 2017

Starting from the macroeconomic processes of public finance, this article examines the road to reaching financial stability and sustainable economic growth. It outlines the role played by rule-based budgeting in this process. It introduces the regulatory and institutional solutions and explains how, as a logical consequence of being part of a framework, this service can become a useful aspect of financial policy by implementing the respective regulations of the system and of annual budgetary practice. It reaches the conclusion that "elevating" the major stipulations of the rule-based budget framework and the operational rules of the institution safeguarding the implementation into the Fundamental Law of Hungary in 2001 was unavoidable from the aspect of strengthening fiscal responsibility. The article deals with the linkages of the Stability Act, the major characteristics of the work done by the Fiscal Council and the body's recommendations made in the last few years. Finally, it illustrates with some data the improvement of fiscal (public finance) stability supported by rule-based budgeting.

2011

As we are in the middle of the 2007-2013 programming period, we have some experience already about the utilization of the EU funds in the Central-Eastern-European region. It is known that in the current programming period, the second largest policy within the European budget (based on the allocation of financial sources), is the regional/cohesion policy with more than 347 billion EUR. Since the new members states joined in 2004 and 2007 cannot even reach the average GDP per capita in the integration, the focus of the structural developments have been these countries and regions since that time. The amount of the allocated funds for these regions is considerable but the main question is how efficiently they can use these sources and whether they can step onto the path of development. In our study we try to examine how Hungary is prepared for the utilization of the EU funds and what have been the most popular fields of development in the past few years. We try to study this topic with considering the most important long-term objective of the EU's regional policy as well, namely the reduction of unprovoked inequalities and differences between the NUTS 2 regions. Based on our research findings and professional experience, we can state that channeling the financial sources available for this purpose has also been a difficult task for the policy makers since their introduction.

2000

Technical Papers are published to communicate the results of the Bank's work to the development community with the least possible delay. The typescript of this paper therefore has not been prepared in accordance with the procedures appropriate to formal printed texts, and the World Bank accepts no responsibility for errors. Some sources cited in this paper may be informal documents that are not readily available. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. The boundaries, colors, denominations, and other information shown on any map in this volume do not imply on the part of the World Bank Group any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. The World Bank encourages dissemination of its work and will normally grant permission promptly.

The anal ysi s and eval uati on of econom i c pol i ci es, especi al l y those of a regi onal aspect i s one current research area of econom i cs. Thi s focus i s connected to the i ssues of regi onal i sati on, regi onal convergence-di vergence and absorpti on capaci ty i n the case of those countri es that j oi ned the European Uni on ( EU) i n 2004 and i n 2007.

2012

2016

The views and opinions expressed in this publication reflect Author’s point of view and not necessarily those of CASE.

2004

xvii planning, outsourcing, municipal enterprises, public-private partnership, project preparation and implementation. In addition, they adopted the principle of cost-recovery service fees and tested target subsidization of the poorest social groups. One can conclude that the fi rst "bachelor" phase of intergovernmental reform is over and the actors at both national and local level should continue modernization at a more demanding "graduate" level. Our assessments of the achievements refl ects the latter perspective. Th is book provides a comprehensive and consistent analysis of a decade-long transition. Several chapters have been presented and received outstanding interest in workshops, training sessions, and conferences (for example, in various CIS and Balkan countries). Th ese experiences suggest that the material is useful for government practitioners and specialists, and a kind of handbook for trainees and university students in the transition economies and beyond. Th e book consists of two parts. Th e fi rst is a comprehensive overview of developments in the 1990s with a list of policy proposals in view of Hungary's advanced stage of transition. Th e second part consists of 28 case studies in three sections. Th e fi rst addresses issues of enhancement of the overall intergovernmental system. Th e second sets out experiences in building local government capacities in strategic management and fi nance. Th e last section addresses requirements for building a competitive framework for fi nancing subnational governments.

Policy Research Working Papers, 1999

To control the expansion of government contingent obligations to cover liabilities emerging from directed liabilities and reduce fiscal vulnerability, one must be credit, may not be sustainable. able to identify and measure them. Brixi, Ghanem, and In Macedonia, the present fiscal equilibrium may be Islam discuss how this may be done and demonstrate temporary because the stock of existing contingent how the assessment of fiscal adjustment may change liabilities could add 2 to 4 percent of GDP to future substantially when a broader picture of government deficits. And methods used to reduce the "traditional" liabilities is included. deficit are unlikely to be sustainable without further They base their analysis on experience in analyzing modification. fiscal adjustment in the Czech Republic and Macedonia. Brixi, Ghanem, and Islam conclude that governments: Their work demonstrates the importance of including Must find better ways to identify and evaluate contingent liabilities when assessing the magnitude of the contingent liabilities arising from the banking system, true fiscal adjustment and when analyzing fiscal nonbanking financial institutions, public enterprises, or sustainability. the contingent and direct liabilities of subnational To the extent that explicit expenditures are shifted offgovernments. budget or replaced by guarantees, the achieved * Need to better manage their risksfor example, improvement in fiscal balances is overstated. building adequate reserve funds and hedging risk, where For the Czech Republic, adjustment may have been possible. overstated by some 3 to 4 percent of annual GDP. A * Should examine the implications of the bias toward stabilization program accompanied by a build-up of adding contingent liabilities and develop administrative contingent liabilities, particularly state guarantees and reform as part of analyzing budget management. This paper -a joint product of the Poverty Reduction and Economic Management Sector Unit, Europe and Central Asia Region, and the Office of the Senior Vice President and Chief Economist, Development Economics -is part of a larger effort in the Bank to support the quality of fiscal adjustment in its client countries. Copies of the paper are available free from the World Bank,

The 1923 Global Economic Crisis (also called " The Great Depression ") that had hit the whole world, caused the economists and politicians to see more clearly. As it has become obvious several times after World War II., deep changes were needed to be done concerning economic processes. In those times, many smaller crises had risen in different countries, affecting their micro-economic structures, however neither of them had such widespread effects as the Global Financial Crisis in 2008, that has struck several economic sectors, most of all, the finance industry. Numerous studies had been carried out, examining the causes and consequences of the 2008 Crisis. In this study the authors will give an organized overview on the circumstances that characterized the outbreak of the crisis, and focus on the impacts of the events, in particular, its effects on Hungary. To manage the crisis, each country used different economic approaches, took different measures, but the main concept, that economic processes needed strict regulations, was globally accepted, or at least, identified. Regulation of the financial sector, more specifically, of accounting standards was and is of paramount importance. At the outbreak of the crisis, Hungarian economy had been in a unique situation, and directly after 2008, Hungarian economic indicators showed a more favorable economic state compared to Western European countries. This has occurred because of the government's stabilization fiscal and economic policies in the years preceding the depression, when they had been trying to compensate the financial and economic decisions made during the previous years. But these indicators soon have changed and began to demonstrate a more realistic picture and showed the true economic state of the country. Besides the financial area, the Crisis had affected—on account of foreign currency lending—a wide range of the Hungarian society as well.