Hungary's government would maximise the country's public debt at 50% of GDP in the new constitution that would enter into effect in 2012. Meanwhile, the cabinet's reform programme is targeting to reduce state debt to around 65% by the end of 2014. Gergely Gulyás, an MP of the ruling Fidesz party who is taking part in the preparatory works for the new constitution, told InfoRádió that there would be temporary rules in place until the 50% is reached.
The government aims to reduce state debt to around 65% by the end of 2014 from around 80% at the end of 2010. From then on it will take at least another four years to reach 50%, Gulyás said.
He acknowledged that they are hoping to achieve a massive economic growth that would allow such a debt reduction. He believes it would be a practical approach if a mechanism was embedded in the law that would determine what economic policy measures should be used at what growth rates.
Once they reach a sub-50%-of-GDP level and the public debt starts to rise again, special rules would go live both on the spending and revenue sides of the budget that would become ever stricter. This way Hungary could even prescribe a surplus in the deficit target, Gulyás addressed the issue of "debt breaks".
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