The IMF released a report on 22 April 2016 following consultations with Hungary under Article IV of the IMF’s articles of agreement.
Hungary has been experiencing robust economic growth in the past few years and output expanded by 2.9% in 2015. The 2015 fiscal deficit was below target as government revenue increased with the growing economic activity, improvements in the tax administration and certain one-off revenues. Policy action is however required to reduce vulnerabilities and increase medium term, private sector led growth.
The IMF considers that priority should be given to more efficient public spending, broadening of the tax base and rationalizing the tax system. Pushing through these reforms would permit further reduction in sectoral taxes and higher spending on infrastructure.
Structural reforms are required to improve the business climate and increase potential for economic growth. The government should reduce the regulatory burden, increase policy predictability and limit state involvement in the economy. There is a need to upgrade labor skills, encourage innovation and entrepreneurship and use EU funds to boost competitiveness.
