6.3.2012 |
EN |
Official Journal of the European Union |
L 66/6 |
COUNCIL DECISION
of 24 January 2012
establishing whether effective action has been taken by Hungary in response to the Council recommendation of 7 July 2009
(2012/139/EU)
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union, and in particular Article 126(8) thereof,
Having regard to the recommendation from the European Commission,
Whereas:
(1) |
According to Article 126(1) of the Treaty, Member States are to avoid excessive government deficits. |
(2) |
The Stability and Growth Pact is based on the objective of sound government finances as a means of strengthening the conditions for price stability and for strong sustainable growth conducive to employment creation. The Stability and Growth Pact includes Council Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation of the excessive deficit procedure (1), which was adopted in order to further the prompt correction of excessive general government deficits. |
(3) |
By Decision 2004/918/EC (2) taken on 5 July 2004 the Council, upon a recommendation from the Commission, decided, in accordance with Article 104(6) of the Treaty establishing the European Community (TEC), that an excessive deficit existed in Hungary (3). |
(4) |
On 5 July 2004 the Council, upon a recommendation from the Commission, recommended in accordance with Article 104(7) TEC that the Hungarian authorities take action in a medium-term framework in order to bring the deficit below 3 % of GDP by 2008. By Decision 2005/348/EC (4) taken on 18 January 2005 the Council, in accordance with Article 104(8) TEC, established that Hungary had not taken effective action in response to the Council recommendation. |
(5) |
On 8 March 2005, upon a recommendation from the Commission, the Council adopted a second recommendation in accordance with Article 104(7) TEC, confirming the 2008 deadline for the correction of the excessive deficit. After a substantial deterioration of the budgetary outlook in Hungary, by Decision 2005/843/EC (5) taken on 8 November 2005 the Council, in accordance with Article 104(8) TEC, established that Hungary had for the second time failed to take effective action in response to the Council recommendations. |
(6) |
Accordingly, on 10 October 2006, upon a recommendation from the Commission, the Council adopted a third recommendation in accordance with Article 104(7) TEC to Hungary, postponing the deadline for the correction of the excessive deficit until 2009. On 7 July 2009, the Council in its recommendation adopted in accordance with Article 104(7) TEC concluded that the Hungarian authorities could be considered to have taken effective action in response to the recommendations from October 2006. With respect to the background of the severe downturn in the context of the economic and financial crisis, in the same recommendation the Council issued a revised version of the third recommendation pursuant to Article 104(7) TEC. |
(7) |
The Council recommendation of 7 July 2009 called on the Hungarian authorities to put an end to the excessive deficit situation by 2011 at the latest. Inter alia, Hungary was recommended: (i) to limit the deterioration of the fiscal position in 2009 by ensuring a rigorous implementation of the adopted and announced corrective measures to respect the target of 3,9 % of GDP; (ii) starting from 2010, to implement rigorously the necessary consolidation measures to ensure a continued reduction of the structural deficit and a renewed decline of the headline deficit, with an increased reliance on structural measures, in view of warranting a lasting improvement of public finances; (iii) to spell out and adopt in a timely manner the consolidation measures necessary to achieve the correction of the excessive deficit by 2011; (iv) to ensure a cumulative 0,5 % of GDP fiscal effort over 2010 and 2011; and (v) to ensure that the government gross debt ratio was brought onto a firm downward trajectory. |
(8) |
On 27 January 2010 the Commission adopted a Communication to the Council (6) concluding that, based on information available at the time, Hungary had taken effective action in response to the Council recommendation of 7 July 2009. The Commission arrived at its conclusion by taking into account, in particular, consolidation measures of 1,5 % of GDP to meet the 2009 deficit target of 3,9 % of GDP, structural reforms in the pension and the social benefit system supporting the achievement of the 2010 deficit target of 3,8 % of GDP, and progress regarding the implementation of the new fiscal framework, but at the same time, the Commission gave an alert about considerable risks. |
(9) |
On 15 December 2011 Hungary submitted its Report on the measures taken in response to Council Recommendation of 7 July, 2009 under Article 126(7) of the Treaty, December 2011 (‘December 2011 EDP progress report’) to the Commission and the Council. On the basis of, inter alia, that progress report, an updated assessment of the action taken by Hungary to correct the excessive deficit by 2011 in response to the Council recommendation of 7 July 2009 leads to the following conclusions:
|
(10) |
The overall conclusion is while Hungary formally respects the 3 % of GDP reference value by 2011 this is not based on a structural and sustainable correction. The budget surplus in 2011 hinges upon substantial one-off revenues of over 10 % of GDP and is accompanied by a cumulative structural deterioration in 2010 and 2011 of 2,75 % of GDP compared to a recommended cumulative fiscal improvement of 0,5 % of GDP. Moreover, the authorities are implementing substantial structural measures in 2012 reducing the structural deficit to 2,6 % of GDP; the 3 % of GDP reference value is again only respected thanks to one-off measures of close to 1 % of GDP. Finally, in 2013, the deficit (at 3,25 % of GDP) is expected to surpass the 3 % GDP deficit threshold again even after taking into account additional measures announced since the 2011 autumn forecast. The higher deficit in 2013 is mainly linked to the fact that temporary one-off revenues are being phased out as planned, while not all planned structural reforms are sufficiently specified. Overall, this supports the conclusion that the response by the Hungarian authorities to the Council recommendation of 7 July 2009 adopted in accordance with Article 104(7) TEC has been insufficient, |
HAS ADOPTED THIS DECISION:
Article 1
Hungary has not taken effective action in response to the Council recommendation of 7 July 2009 in accordance with Article 104(7) TEC within the period laid down in that recommendation.
Article 2
This Decision is addressed to Hungary.
Done at Brussels, 24 January 2012.
For the Council
The President
M. VESTAGER
(2) OJ L 389, 30.12.2004, p. 27.
(3) All EDP-related documents for Hungary can be found at the following website: http://ec.europa.eu/economy_finance/economic_governance/sgp/deficit/index_en.htm
(4) OJ L 110, 30.4.2005, p. 42.
(5) OJ L 314, 30.11.2005, p. 18.
(6) COM/2010/0010 final.