Hungary, Детальна інформація

Expenditure Policy

Along with changing revenue policy expenditure policy is a crucial role of any government and especially important policy questions for governments in transition. Hungary’s main policy stance on expenditures is to try to match in-kind efforts and expenditure policy to specifically earmarked funds.

Defense spending

As mentioned in the introduction when Hungary decided to withdraw their membership with the Warsaw Pact they decided to drastically reduce their military expenditure. Hungary’s reduction in defense spending was a key decrease in fiscal consolidation to help decrease their ever rising budget defict. The graph in Fig. 1.5 represents Hungary’s decrease in defense spending over the last ten years.



Fig. 1.5

Source: SIPRI Military Expenditure Database

Social Welfare Reform

Reforms to Hungary’s Social Welfare systems have been plentiful. Decreases in Welfare systems have mainly been reallocation of subsides on a stricter criteria basis. Hungary has made constant efforts to restructure social programs in which have proven to be ineffective. One example is the reform of the “Family Allowance System.” After a evaluation of the old program it was proven to be cost ineffective and replaced by a new “Family Support System”. This new “Family Support System” target families in need based more on income criteria and targeted people in the greatest need. Another key social expenditure reform was that of pension and health programs.(CCET, 2)

Pension and Health Programs

Hungary experience great abuse in the areas of health and pension programs, but have taken steps in the right direction to help correct the situation. One such of these decisions was that of increasing the number of days employers are liable for sick pay. This reform travels in the right direction because the policy had reduced the Social Insurance Fund and also created minimum incentives for abuse of the system. Much more needs to be done in the way of pension and health reform however this policy shows a step in the right direction..(CCET,2)

Expenditure Summary

The underlying tone of Hungary’s expenditure policy is that of reducing the budget deficit without creating economic turbulence. Hungary faces many obstacles in trying to reduce their budget deficit. Such obstacles are rising inflation and high rates of unemployment these problems lead to substantial social problems. Regardless, Hungary is still looking the right “social safety net” but not at the expense of its economic viability and without effecting production and output ion a negative way.

Conclusion

Hungary has come a long way since the initial transition from a centrally planed economy to a market economy in 1988. However, Hungary continues to strive to overcome the obstacles described in this paper. The transition has been difficult for the people of Hungary. People accustom to a centrally planned economy are not typically faced with subjects such as unemployment or cost budgeting. Therefore, many Hungarians have become disillusioned with the new market economy. However, most (including socialist) have insisted that economic progress continue. In order for Hungary’s economy to continue its success it must remain to be egalitarian in both the way it collects cash through taxes and the way it redistributes resources to the people of Hungary. Hungary must be sensitive to the vulnerable such as the unemployed and the unskilled, during the sometimes unforgiving transition to a market economy.

Bibliography

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