Hungarian parliament approves 2010 budget

Budapest - The Hungarian parliament on Monday evening passed the 2010 budget bill by 201 votes to 179, putting in place a key final part of the interim government's crisis management policy. Prime Minister Gordon Bajnai described the budget as one of "security and stability," the state news agency MTI reported.

The budget is aimed at keeping the government deficit to 3.8 per cent of gross domestic product (GDP) next year, despite a deep and ongoing recession.

"This decision seals the nation's security, even amid the global economic crisis," Bajnai said.

Ministries, local authorities and the state-owned rail network are among those entities that will find themselves at the sharp end of public spending cuts in 2010.

Prime Minister Gordon Bajnai's caretaker government has already made huge cuts to public sector pay and pensions since it took office in April.

If next year's budget targets are met, it would give Hungary one of the lowest deficits, as a proportion of GDP, in the European Union.

Both the International Monetary Fund (IMF) and the European Commission deemed the target achievable after a fact-finding mission earlier this month, although they cautioned that there will be no room for any loosening of the purse strings.

The finance ministry forecasts that the Hungarian economy will shrink by 6.7 per cent this year and 0.6 per cent in 2010, before returning to growth in 2011.

Bajnai's cabinet now has a maximum of five more months in office before general elections, which opinion polls and recent by-election results suggest will sweep the center-right Fidesz-Christian Democrat alliance into power.

The opposition bloc voted against the budget, and Fidesz leader Viktor Orban has declared that it will be torn up and rewritten if and when his party forms a new government.

A concerted effort to lower the budget deficit was a key condition for a 25-billion-dollar IMF-led bail-out package credited with saving Hungary from bankruptcy a year ago.