Hungary's government will set aside a safety buffer in the 2011 budget mostly by freezing 187 billion forints ($927.7 million) in ministry spending, according to a government decree published in the Magyar Kozlony gazette. Based on the decree, the government plans to freeze a total of 187 billion forints at its various ministries by February 23.
Hungary's centre-right government recently decided to set aside a 250 billion forint reserve fund in the budget this year to protect against potential market volatility as Europe grapples with a debt crisis. It has not been clear so far how the government planned to save the necessary funds for the safety buffer. The Human Resources Ministry - which is in charge of health care and many other areas - must freeze 39 billion forints, while the next biggest burden is on the Interior Ministry with 35 billion, and the Defence Ministry with 26.3 billion forints.
In addition to the spending freezes at the ministries, a further 16 billion forints will have to be saved at the state labour market fund, and cuts will be made on price subsidies, research and innovation costs and in some other areas. The government is working on a three-year fiscal adjustment plan designed to produce savings worth 600-650 billion forints to stabilise the budget after 2012 when "crisis" taxes worth 1.3 percent of GDP expire and tax cuts to boost growth are extended. Prime Minister Viktor Orban is expected to outline details of the fiscal reforms in parliament on Monday.
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